Buying property by private sale

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Overview

In a private sale, the property is advertised and prospective buyers are invited to make offers to the seller or the seller’s agent, and the sale does not go to auction.

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 all circumstances. For more information, view the Cooling off on a property sale information below.

Note: New laws were introduced in May this year to strengthen laws against underquoting in Victoria. Underquoting can occur when a property is advertised at a price that is less than the agent’s estimated selling price, the seller’s asking price, or a price already rejected by the seller. For more information on real estate pricing and advertising, view our Understanding property prices page.

Due diligence checklist

All sellers, or estate agents acting on their behalf, must have our 'due diligence checklist' available to prospective buyers at open for inspections. The checklist aims to help buyers identify any issues that may affect their decision to buy the property, such as buying into an owners corporation, flood or fire risk, or whether there is insurance coverage for recent renovations. View our Due diligence checklist for home buyers page.

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, 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 or not the seller has accepted your offer by that date.

Conditional offers

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

  • getting approval for 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 finance, 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 seller’s agreement.

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, or
  • offer a lower price and be prepared to negotiate upwards. A seller with several offers may decide to accept another offer without giving you the opportunity to increase your offer.

A seller may reject an offer for reasons other than the price, such as conditions placed on the offer. For example, a seller might reject your offer if it is conditional on a longer settlement period, or if another buyer offers a similar price with the seller’s preferred settlement period.

You can engage a buyer’s advocate to bargain for you. For more information about engaging a buyer’s advocate, view our 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 a higher offer.

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.

Contract of sale – private sale of property

The contract of sale should state:

  • details of the property
  • your name and the seller’s name
  • details of the seller’s agent, if they are using one
  • details of yours and the seller’s legal practitioner or conveyancer, if any
  • the price you are offering
  • the required deposit amount
  • the balance of the purchase price owing at settlement
  • a settlement period you agree with
  • any conditions, such as subject to finance or a building inspection
  • items in the property that are part of the purchase. (There is a section for this in the contract of sale.) If these items are not listed in the contract and you sign it, it may be difficult to claim ownership of those items at settlement.

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

Paying the deposit after auction

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

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

If an agent is managing the sale on behalf of the seller, you pay the deposit to that agent who must hold it in a trust account until settlement, or transfer it to the seller’s legal practitioner or conveyancer’s trust account.

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

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

If you agree, the deposit can be released to the seller before settlement. 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.

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

When is the property 'sold'?

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 of the signed contract.

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 is paid.

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 website.

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

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

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.

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.

If you decide you no longer want to buy the property, you can cool-off by giving written notice to the seller or the seller’s agent. You will be entitled to a full refund of any money paid, less $100 or 0.2 per cent of the purchase price, whichever is greater.

The cooling-off period does not apply if:

  • 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.

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