Buying via Auction Vs Buying via Private Sale

We have all heard of both terms Auction and Private sale, and for each buying method there certainly are the Pros & Cons of each buying method.


Below is a list summing up the good and bad aspects of both types, as well as some buying tips for both Auction & Private sales for you to consider and keep in mind when attending both buying situations.


Buying via Private Sale

PROS:

  • You are the potential buyer are in the driver's seat as you are in the strongest position to negotiate with the vendor directly
  • You can even make several offers with different terms as there are limited other buyers'¦you are not locked into a binding contract as you can continual to negotiate until all resources are used up.
  • Once you actually made an offer that is accepted by both parties, you enter into a contract, which typically has a cooling off period, which you can action if you require pulling out of the contract or changing your mind.

CONS:

  • The main disadvantage of buying via private sale is that you may not be aware, if the vendor, has any prior offers, as you would via Auction, or with a Real Estate Agent.
  • This could definitely work against you, if another party has made a higher offer to the vendor, which you are not aware off, and is accepted, by the vendor, when you might have been willing to make a similar offer eventually!


Buying via Auction

PROS:

  • This type of buying allows you to actually see you competition and other bidders, as you are actually bidding against each other to purchase the property, the highest bid ends up purchasing the property.
  • The property becomes your then and there on the day, once you are the highest bidder

CONS:

  • The main disadvantage is that once you are the highest bidder and you are the final bid, there is NO COOLING OFF PERIOD AT ALL AT 'AUCTIONS'
  • You must put down 10% deposit immediately
  • You also have limited scope to negotiate on the terms and conditions of the sale contract
  • You may also fall into the trap of getting caught up in a bidding war which could push the price up and up, and you may pay far too much and also purchase above your buying and lending and affordability means , and you actual budget spending amount as well!


Buying Tips

PRIVATE PURCHASE:

  • Get a mortgage PRE-APPROVAL, upfront, it will establish your credentials as a serious buyer, you will also have an lending amount that the lender is prepare to lend you, so you do not purchase beyond what you can afford, by having this amount, could also give you some leverage to negotiate with, and also establish that you are definitely a serious buyer as well!
  • It would be a wise idea not to sign any contract, without the approval of your solicitor
  • Insert an acceptance date in your offer by which time it will lapse if it is not officially accepted

AUCTION:

  • Always attend as many Auctions as you possibly can, this will get you familiarised with the Auction buying process , before you even start to take the plunge yourself
  • Get a mortgage PRE-APPROVAL, upfront, it will establish your credentials as a serious buyer, you will also have an lending amount that the lender is prepare to lend you, so you do not purchase beyond what you can afford, by having this amount, could also give you some leverage to negotiate with, and also establish that you are definitely a serious buyer as well!
  • Always obtain a copy of the auction rules and conditions and certainly make sure that you understand them, if you are not sure then it would be a wise idea to seek legal advice.
  • Always thoroughly examine the property before bidding at auction, including all tests made like pest and building inspections
  • It would also be wise to attend the inspection with another person, as they say 2 sets eyes and 2 minds and 2 opinions are far better than 1 one!
  • Then most importantly, set your maximum bidding limit and stick to it.
  • Walk away if you need too as well!


If you have any queries regarding any Finance, Mortgage or Insurance or any other matter,
please don't hesitate to contact our professional team at FLR Solutions on:

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