Buying property by private sale

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About private sale of property

In a private sale, the property is advertised and prospective buyers are invited to make offers.

You negotiate with the seller and agree on a sale price, usually with the assistance of an agent.

The contract can be conditional. If the seller agrees, you can make the sale subject to obtaining a loan, a satisfactory building inspection report, or other conditions.

For residential properties and rural properties less than 20 hectares, you have three business days to think about your decision and change your mind. This is called ‘cooling off’ and is not possible in some circumstances. For more information, view the cooling off on a property sale information below.

Making an offer on a property

If an agent is managing the sale:

  • you must make your offer to buy a property through the agent
  • you will be asked to make an offer by signing the contract of sale
  • the agent will take your offer to the seller, unless the seller has instructed them not to.

If an agent is not managing the sale, you make your offer to the seller. The seller will negotiate with you about the price and terms of the contract.

We recommend you write into the contract a date by which your offer will lapse. This way you will know whether the seller has accepted your offer, by a time that suits you.

Conditional offers

In a private sale, you can negotiate with the seller to make the sale subject to certain conditions such as:

  • obtaining a loan (‘subject to finance’)
  • the sale of an existing property
  • the successful completion of a building or pest inspection

If the contract is subject to obtaining a loan, you should always nominate a lender in the relevant section of the contract.

When you buy at auction, you cannot put conditions on the contract (for example, a longer settlement period) without the agreement of the vendor.

How much to offer?

The decision on how much to offer is difficult. You need to consider whether to:

  • make your best offer up front
  • offer a lower price and be prepared to negotiate upwards. A seller with several offers may decide to accept another offer without inviting you to offer more.

A seller may reject an offer for reasons other than the price - including conditions placed on the offer. For example, a seller might reject an offer conditional on a longer settlement period, if another potential buyer offers a similar sale amount with the seller’s requested settlement period.

You can engage a buyer’s advocate or other professional to bargain for you. You can expect to be charged a fee for this service. For more information about engaging a buyer’s advocate, view the Seek expert advice on property page.

Negotiating a property sale

If the seller does not accept your offer, the agent may ask if you are prepared to make another one.

Through negotiation, the agent will attempt to achieve a mutually acceptable price and terms. This negotiation may involve:

  • verbal offers (but only written offers can lead to a binding contract of sale)
  • more than one person making an offer. The agent will negotiate between parties to obtain the highest possible price for the seller
  • agreeing on the settlement period, usually between 30 and 90 days
  • agreeing on the items that will be included or excluded from the sale; for example, a dishwasher.

When making an offer in writing, make sure the contract of sale lists:

  • the price you are offering
  • a settlement period you are comfortable with
  • any conditions you require about obtaining a loan or a building inspection
  • items that are part of the purchase. (There is a space for this in the contract of sale.) If not listed, it may be difficult to claim ownership of those items at settlement.

Paying the deposit on a private sale

When you make a written offer you will be asked to pay a deposit of either:

  • the full amount
  • a nominal amount, with the remainder to be paid by a date set out in the contract of sale.

Your deposit will be returned to you if the seller does not accept your offer.

If an agent is managing the sale on behalf of the seller, you pay the deposit to that agent. It will be held in the agent’s trust account until settlement or it is transferred to a legal practitioner’s or conveyancer’s trust account.

If an agent is not managing the sale, you will pay the deposit either:

  • directly to the seller, who must pay the deposit to their solicitor or conveyancer, or bank it in a special purpose account in an authorised deposit-taking institution in Victoria. The account must be in both the seller’s and your name
  • to the seller’s legal practitioner or conveyancer, who will hold it in trust until settlement.

If you agree, the deposit can be released before settlement to the seller. For this to happen:

  • the contract must be unconditional
  • you must be satisfied with the proof of debts information provided by the seller.

You cannot release the deposit until 28 days after the date the contract was signed.

When is the property sold in a private sale?

The property is sold when both you and the seller have signed the contract of sale.

All parties who sign the contract must be given a copy.

The sale is finalised at settlement when all checks have been made, the title and transfer documents exchanged, and the balance of the purchase price paid.

Contract of sale – private sale of property

The contract of sale contains:

  • details of the property
  • names of the seller and buyer
  • details of the seller’s estate agent, if they have one
  • seller’s and buyer’s legal practitioner or conveyancer, if they have one
  • the price
  • the deposit paid
  • the balance of the purchase price owing at settlement
  • any special conditions (such as ‘subject to finance’).

An agent can complete the details on a contract in preparation for you and the seller to sign.

Property sales and GST

The goods and services tax (GST) applies to the purchase of new homes. It does not apply to established homes unless the seller is registered for GST. You can check a seller’s GST status on the Australian Business Register.

Do not sign the contract without checking whether GST applies. If uncertain, seek professional advice.

The contract must clearly specify whether the price is inclusive or exclusive of GST and, if included, how the amount will be calculated.

Cooling off on a property sale

A cooling-off period of three clear business days applies to private sales of residential and small rural property sales regardless of price.

The cooling-off period gives you time to consider the offer. It begins from the date you sign the contract, not from the date the seller signs it.

To cool off, you must give written notice to the seller or the seller’s agent. You will be entitled to a full refund of money paid, less $100 or 0.2 per cent of the purchase price, whichever is greater.

The cooling-off period does not apply when:

  • the property was purchased at a public auction or within three clear business days before or after a public auction
  • the property is used mainly for industrial or commercial purposes
  • the property is more than 20 hectares and used mainly for farming
  • you previously signed a contract for the same property with the same terms
  • the buyer is an estate agent or corporate body.

Last updated: 01/10/2014

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