It’s helpful to understand different purchasing methods available and how they work.
If you have got this far, you are well on your way and we encourage you to learn more about these approaches:
Buying at Auction
- This is an unconditional sale. Once the hammer falls, the sale is binding, and there is no cooling-off period. Ensure your finances are pre-approved and ready.
- Immediate deposit: You’ll need to pay a deposit (usually 10%) on the day of the auction.
- No negotiation: The price is determined by the highest bid, leaving little room for negotiation.
Advantages
- Transparency: You can see the bids and know the competition.
- Quick Process: Once the auction is over, the transaction is straightforward and typically moves to settlement within 30–60 days.
Challenges
- High pressure – Bidding in a competitive environment can be stressful.
- Risk of overpaying – Emotional bidding can lead to paying more than the property’s value.
Tips for Auction Success
- Attend several auctions as an observer to understand the process.
- Set a clear budget limit and stick to it.
- Consider hiring a buyer’s advocate to bid on your behalf.
Buying Through Private Sale
In a private sale, the property is advertised with a fixed price or a price range. Interested buyers can submit offers directly to the real estate agent representing the seller.
Key Features
- Flexibility to negotiate: Buyers and sellers can negotiate price, terms, and conditions.
- Cooling-off period: A three-business-day cooling-off period applies in Victoria unless the sale occurs shortly after an auction.
Advantages
- More time to inspect the property, arrange finances, and make an informed decision.
- You can include conditions in your offer, such as subject to finance or a satisfactory building inspection.
Challenges
- Less transparency: You won’t know how many other buyers are interested or the amounts they’ve offered.
- Longer process: Negotiations can take time, delaying the final outcome.
Tips for a Smooth Private Sale
- Research the local market so you have a good idea of the property’s value before you make an offer.
- Be smart with conditions: Add clauses such as “subject to finance” or “subject to building and pest inspections” to protect yourself.
Buying Off the Plan
This means purchasing a property that hasn’t been built yet. Instead of walking through a completed home, you’ll rely on floor plans, architectural drawings, and those glossy artist impressions that show you how it should look once finished.
How It Works
- Delayed settlement: Settlement occurs when construction is completed, which can take months or years.
- Stamp duty savings: You may pay less stamp duty if you purchase early in the construction phase.
Advantages
- Customisation: Some developers allow buyers to choose finishes or layouts.
- Modern features: New properties often include energy-efficient designs and updated technologies.
Challenges
- The finished product might not be exactly like the plans; there’s always a bit of a leap of faith involved.
- Property values could dip while you wait for construction to finish, which might impact your investment.
- Companies can go bankrupt or delay finishing.
- Recovering your investment is not guaranteed if anything goes wrong.
Tips for a Smooth Off-the-Plan Purchase
- Do your homework on the developer: Look at their track record – reliable developers with a history of delivering quality projects are your best bet.
- Know your rights: Get the contract reviewed by a lawyer to understand what happens if construction is delayed or plans change.
- Check their work: Visit completed projects by the same developer to see if their finished properties match your expectations.
Buying off the plan can be an exciting way to secure a brand-new home or investment property, but it’s important to go in with eyes wide open.
Buying Through Expressions of Interest (EOI)
This is a way to make your best offer on a property – privately and in writing. Unlike auctions, EOIs are submitted by a set deadline, often with conditions attached, such as “subject to finance” or “subject to inspection.”
How It Works
- No public bidding: It’s a confidential process, so no-one knows what other bidders are offering.
- Seller options: The seller can accept your offer, reject it, or return with a counteroffer to negotiate.
Why Choose an EOI?
- Take your time: You can carefully consider your offer and add conditions.
- No need to face a crowd: EOIs are private, and negotiations happen quietly.
What to Watch Out For
- Not knowing what others are offering can be tricky. Don’t let uncertainty push you too high.
Tips for Success with an EOI
- Craft a strong offer. Seek advice about value if you need to. Create an offer that’s competitive but not excessive.
- Add a personal touch: If bids are in a similar range, the owner may lean to someone who writes what they feel about the property.
Expressions of interest offer a more private, considered approach to buying a home. With the right strategy and some thoughtful preparation, you could make an offer that’s both attractive to the seller and right for your budget.
Buying a House and Land Package
A house and land package is like a two-in-one deal: developers offer you a block of land and a house design to go with it. You pick the design that fits your style and budget, customise it to your liking, and then the construction begins.
How Does It Work?
- Turnkey options: Some packages are ready to go, with landscaping, fixtures, and fittings included—move in when it’s done!
- Fixed costs: The costs are usually set upfront, so you’ll know what you’re paying and can avoid unpleasant surprises.
Advantages
- Design it your way: Choose the layout and finishes you like to make the home yours.
- Stamp duty savings: You only pay stamp duty on the land, not the house, and thus can save thousands.
What to Keep in Mind
- Location: These packages are often in new developments on the outskirts of cities or regional areas, which might not suit everyone.
- Patience: Building a home takes time – expect to wait 6–12 months or more for construction to finish.
Tips for House and Land Packages
- Research the area carefully. Make sure it aligns with your life and goals—check schools, transport, hospitals, and other amenities.
- Check the fine print. Does the package cover everything, or will you need to pay extra for landscaping, fencing, or specific finishes?
House and land packages are a great way to get a custom-built home with less stress. With good research and preparation, you can create a space perfect for you and your family.
Which Option Is Right for You?
- Auction is best for buyers prepared to act quickly and who have finances in place.
- Private sale is good if you want more time to negotiate and include conditions.
- Off the plan is good for those looking to buy new and take advantage of stamp duty savings, provided risks are considered.
- Expressions of Interest: Suitable if you want to avoid public bidding wars.
- House and land package: If you want a custom-built home in new developments and consider the risks are manageable.
- Buyer’s advocate: Helpful if you need expert guidance or someone else to manage the process and can afford to pay the extra.
CSMC’s Housing resource was made possible thanks to the support of:
