In a property market increasingly showing signs of slowing demand and competition, many home sellers are choosing to sell their homes through a private sale method.
Auctions are generally considered the best way to sell a property, and it shouldn’t come as a surprise.
Interested parties come charged with adrenaline, ready to fight fiercely and competitively over their ‘new home’, likely making decisions based on emotions rather than logic.
The icing on the cake is that the sale is a legally binding contract with no terms or conditions, and no cooling off periods.
That’s the upside – the downfall is that you need charged up buyers for this to work; and in a market where clearance rates are averaging 50-60% in Victoria, it’s just not a feasible method.
As a purchaser, buying through a private sale offers many benefits. Unlike an auction, terms and conditions can be woven into your contract, and there is the ability to cool off from contract within 3 business days if you change your mind.
Having said that, successfully purchasing a private sale home isn’t any easier than it is at an auction.
At the end of the day, while people have more time to think their decision-making through, you’re still competing against other parties who have emotionally attached themselves to the home, and have an invested interest to purchasing successfully.
Here are some things you should know before you make your next offer on a private sale property, so that your next offer stands out from the competition:
#1 – Sort out your finances
Increasingly common amongst private sale contracts is purchasers including a ‘subject to finance’ clause into their offers.
A ‘subject to finance’ clause enables the purchaser to legally agree to the purchase of the property, on the condition that their pre-approval from the bank is approved. That means, in the event that the pre-approval is not formally approved for any given reason, the contract can be terminated.
For the sake of security, vendors will always choose an offer that presents the least amount of risk that will enable them to move onto the next stage of their lives.
Vendors will often favour unconditional offers when it comes to finance, rather than an offer that’s pending approval from the bank. Having said that, fewer people are able to make unconditional offers given the banks are increasingly tightening their lending criteria.
While unconditional offers are far more lucrative, it’s important to ensure that you only offer it if you are able to. You don’t want to be stuck with a property you love, with a bill that you can’t meet.
#2 – Organise your building & pest inspection earlier
Another common condition placed on conditional offers on a private sale property, is a ‘subject to building & pest inspection’ clause.
This clause enables purchasers to terminate a legally binding contract on the condition that a property does not meet the structural conditions detailed in the clause signed.
What many purchasers aren’t aware of however, is that building & pest inspections can be arranged prior to making an offer.
This presents you with a huge advantage, as not only will you have confidence in the condition of the property, but you are able to make an unconditional offer without including the above clause based on this confidence.
Having said that, building & pest inspections can be a costly exercise, therefore it’s important to only conduct these on homes that meet your criteria.
#3 – Be prepared to be flexible with your settlement
It’s important to understand that while you may have specific requirements in regards to settlement, so does the vendor.
Many home sellers put their homes on the market to move onto the next stage of their lives; whether it be upsizing the family home, downsizing once everyone has grown up, or liquidating investment assets, just to name a few.
Irrespective of their motivations, there are always settlement requirements that they need, and will ultimately favour. A settlement period of 30 days is not likely to excite a vendor if they can’t move into their new home for 60 days.
Preferred settlement periods are always stated by the selling agent, so it’s important to be aware of this before acting on your interest in a home.
If you are able, being flexible with your settlement terms means that you aren’t limited or confined to a small selection of properties.
#4 – Pay a larger deposit
While this is not a common tactic used by buyers, it can speak volumes in your next offer in a private sale property.
One of the obvious advantages to a larger deposit for some vendors, is the ability to access this early in order to move on to the next stage of their lives, provided a Section 27 is agreed upon by both the vendor and purchaser.
For example, if the vendor needed to purchase another property once they have sold theirs, a larger deposit will enable them to buy a better property.
While a larger deposit won’t serve much purpose to other vendors, it does however show invested interest and commitment to the property, and will ensure that your offer stands out from the crowd.
#5 – Offer what you are prepared to pay
Given that purchasing a property will be one of the most expensive transactions a person will ever make, it’s not uncommon to try and purchase on a bargain.
The bargain mindset can also cost you severely – the cost being the home of your dreams.
When purchasing a property in a private sale, in most cases there are no second chances to provide a final offer.
It’s important to always put your best foot forward when purchasing a property. That is, don’t pay less than what you think it’s worth, and pay only what you are prepared to pay for it.
Purchasing a property successfully through a private sale requires an offer that the vendor simply cannot refuse, and one that stands out from the competition.
At Nguyen Real Estate, we are passionate about helping buyers purchase properties confidently, with care and with ease. You can view our current properties for sale here. Contact us on (03) 9587 6070 today if we can be of service to you.