Real estate auctions and open house inspections are prohibited from 11.59 pm 25 March 2020. However, private appointments for inspection can still be made.
A private treaty sale is when a property is offered for sale at a negotiated price. Often the vendor will set a bottom line price. It is up to the buyer to decide how much they are prepared to pay. The price can be negotiated until a mutually acceptable amount is reached.
Potential buyers will not be told how many other offers have been made or the amount offered.
Making an offer
It will be up to the individual buyer to decide how much they are prepared to offer for the property. They will need to decide whether to offer their best price upfront or start off with a low offer.
It’s possible that the vendor will accept a higher offer without giving other buyers the opportunity to negotiate with them or their agent. In some cases, the vendor will not negotiate on the price at all.
All offers and counteroffers must be made in writing and signed by the buyer. The agent must pass all offers on to the vendor as soon as possible, within 48 hours, unless the vendor agrees to a later time.
When making an offer the buyer can be asked to pay a holding deposit of up to $100. This is kept in trust by the agent and will be returned if the offer is not accepted.
Offers are not legally binding until the vendor and buyer sign a contract of sale. The buyer can make an offer in the form of a contract of sale. A condition can be added to the contract – eg the offer will be withdrawn if the vendor doesn't sign the contract of sale by a certain date. The contract of sale will become legally binding once it is signed by the vendor.
The vendor or agent must make a buyer's information notice (form R3) available to potential buyers during open inspections. The buyer should read this before making an offer.
Contract of sale and cooling off
A buyer can make a contract of sale subject to certain conditions - eg receiving a satisfactory building inspection report. Make sure the condition is specific and clear – speak to a solicitor or conveyancer about the wording. If the condition is not met - eg building inspection unsatisfactory - then the contract of sale can be cancelled.
The buyer is entitled to a cooling off period of two business days. This starts when the vendor's statement was received or from the date the contract of sale was signed, whichever is later.
This will give the buyer an opportunity to withdraw from the sale without being held legally responsible.
A buyer can withdraw from a contract of sale by completing and signing a cooling-off notice. This must be delivered to the vendor or vendor's agent by:
- registered post
- in person.
If a buyer wants to withdraw from the sale after the cooling off period expires, they should get legal advice. There are consequences and risks associated with this.
Once the cooling off period has expired the deposit has to be paid to the vendor (if they are selling the property themselves) or their agent or conveyancer. This money is held in trust until the settlement date.
The vendor decides on the lowest price they would sell the property for. If they are using an agent, this will be written into the sales agency agreement. The agent must not reveal this amount to any potential buyers.
It may be in the vendor’s interest to accept a slightly lower offer if the contract of sale isn't made subject to any conditions.
Although the vendor doesn’t have to accept an offer, if they are using an agent there may be consequences under the sales agency agreement if an offer equal to or more than the bottom line price is not accepted.
A vendor is not entitled to any cooling off period. If they want to withdraw from the contract of sale they should seek legal advice. There can be consequences for breaking a legally binding contract.
On this site
Real Estate Institute - https://www.reisa.com.au/publicinfo/buying-selling-renting-and-investing
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