Positives and negatives of buying via private treaty
Selling property through a private treaty is the most common way to sell a property in Australia, but an industry professional says there are both positives and negatives to the selling method.
John McGrath, chief executive officer of McGrath Estate Agents, says buying via private treaty is less dramatic than buying at auction, but it still has its pitfalls.
"Some buyers have a very strong preference for private treaty because they see it as the 'fairer' and 'less stressful' way to buy real estate," he says.
"At the end of the day, all sales methods have their pros and cons for buyers."
"Don't miss out on a great property for fear of buying it via auction."
According to McGrath the positives and negatives for private treaty purchasing are as follows:
The risks:
- If you don't research comparable sales properly then you can still pay a premium because the asking price might not reflect market value.
- A bidding war can break out with offers escalating rapidly until one person bows out, which can be as nerve racking as an auction.
- When the vendor accepts your offer it doesn't mean the deal is done; it's only done when contracts are exchanged. At auction a property is sold when the hammer falls.
- In some states gazumping is allowed. So even if your offer has been accepted by the vendor they can sell the property to someone else before you've exchanged contracts. The time between offer acceptance and contract exchange is the danger period.
The benefits:
- You don't need to make snap decisions, so it's therefore less emotional than an auction.
- There's more certainty regarding price than at an auction.
- It's possible to negotiate terms and conditions favourable to you and there's usually a cooling off period.
- You don't have to pay for any reports until you've made an agreement to buy the property.
Source: www.switzer.com.au
