Auction or Private Sale: What’s Best for Home Buyers?

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  1. What does sale by private treaty mean?
  2. What is an auction?
  3. Benefits of private sale vs auction
  4. Differences of private sale vs auction
  5. FAQs

A property can be purchased either through an auction or a private sale, and there are pros and cons of each.

Before you make your choice, it’s important to speak to your trusted conveyancer so you can understand the difference between private sale vs auction. to determine what sales method is right for you. Read more to determine which sales method is best for you or get in touch with Owen Hodge today.

What does sale by private treaty mean?

Selling by private sale means a property is advertised and the potential buyers will make offers to the seller or their real estate agent. This generally follows the below process:

Making an offer

The seller will choose the best offer and go forward with the sale. The potential buyer will be required to pay an initial deposit to the seller to establish an interest in the property.

Contract of sale

The sale of the property is complete when the buyer and seller both sign the contract of sale. This sets out the terms and conditions for the sale of the property, the details of the parties involved, the deposit paid, the amount owed at the date of settlement, the settlement period, the title certificate, the planning and zoning certificate issued by the council and the drainage diagram.

Learn more: Special conditions of sale

Cooling off period

The cooling off period is the time where a potential buyer can choose to cancel the purchase. It commonly allows for 5 business days for a residential or small rural property. The buyer can conduct searches, inspection of documents and other reports.

Learn more:


The settlement will usually occur 4 to 6 weeks after the exchange of the contract of sale between the buyer and the seller. The buyer and seller will need to agree on the specified time period and make necessary amendments to the contract of sale before the settlement.

Learn more: Property settlement process NSW

Benefits of private sale

  • The buyer has more control over the sale
  • Sellers have time to consider all potential offers and can even extend this time
  • Buyers can make a private offer without the pressure of others knowing
  • Sellers save expenses on advertising the property

What is an auction?

An auction is the process of buying and selling a house where the buyers will bid against each other to purchase a house. The prospective buyers will bid at competitive prices until the highest bid wins.

The highest bidder will then sign the contract of sale and make an offer to the seller in hopes of securing the property. The seller will accept the offer by signing the contract and the transaction will be finalised. The property will be ‘passed in’ if any bidders fail to meet the reserve price.

In New South Wales, only one bid can be made on behalf of the seller by the auctioneer, and must be shown as a ‘vendor bid’. It must be clearly exhibited and open for inspections before the auction.

Benefits of an auction

  • If there’s strong competition, the purchase price can go above the reserve price
  • An auction is an efficient method to sell your house in a select period of time
  • Your reserve price is protected
  • Sellers can receive pre-auction offers
  • No cooling off period
  • More control over terms of the contract of sale

The differences of private sale vs auction

The decision of which sales method should be used should not be taken lightly. That’s why it’s important to understand the differences between private sale vs auctions, as outlined below:

Private Sale Auction
Cooling off period No cooling off period
The successful bidder is required to pay the deposit immediately Deposit can be paid after the exchange of contract of sale
All inspections of property are to be done before the sale Inspections can be conducted before the end of the cooling off period. The potential buyer can also withdraw the offer if anything unsatisfactory is found
Bidders are unaware of the reserve price until that amount has been reached Potential buyers are aware of the selling price
The bidding is a competition, which can increase the price If a number of people are interested in the property and make offers, the price can rise
The offer at the auction is subject to the vendors terms and conditions The potential buyer can negotiate the terms and conditions before buying the property

Owen Hodge is here for you

If you’re in the process of selling or buying a house and need assistance drawing up a contract of sale, you can turn to Owen Hodge’s conveyancers and property lawyers. Our conveyancers are experienced in all types of property transactions  and will give you a high-quality service at affordable prices. Contact 1800 770 780 to schedule an initial consultation with Owen Hodge today.

Private sale vs auction FAQ

What percentage do auction houses take?

An auctioneer in NSW could cost anywhere from $400 to $1000. There are fees and commissions the auctioneer charges on the sale price if there is a successful sale. This can be anywhere from 11% – 25%.

Make sure to ask your auctioneer when first meeting with them what commission they will take.

Is it better to buy at an auction?

Buying a house through an auction all depends on your personal preference, circumstances and needs at the time. That’s why it’s important to weigh up the pros and cons of private sale vs auction.

Cons of selling a property at auction:

  • There is no guarantee your property will sell
  • You may set the reserve too low
  • Marketing costs may be higher

Pros of selling a property at auction:

  • You can set a reserve price
  • You can sell your home quickly and efficiently
  • Bigger competition amongst buyers

Why do houses go for auction instead of sale?

Typically, sellers opt to sell via an auction because it’s easier and quicker. Sellers can also set a reserve price for the sale of their home, which ensures the minimum sale price for your home will be met.

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