Purchasing a home can be a confusing process, so it’s important that as a potential buyer you understand the different types of sales, even if you have purchased a house before.

By understanding the different types of sales you will know how each process works and also when offers are legally binding. The different types of house sales that will be looked at are:

  • Tender
  • Sale by negotiation
  • Auction


Tender is when a home is sold by setting a deadline date and taking offers until a specific date. The offers can have additional conditions attached to them (such as a finance clause), although this could make your offer not look as good to the seller. Once the deadline date arrives, the seller is presented with all the offers at the same time.

The seller then chooses the offer that they want to accept, but they don’t have to accept any if they don’t like any of them.

Once this has happened all the people who submitted offers will be told whether their offer has been accepted or not. If an offer is accepted the offer becomes legally binding, which means you can’t back out of the agreement. So make sure you are 100% set on purchasing the house.


Sale by negotiation

A house that is for sale by negotiation is sold by receiving offers. Once an offer is received the seller can accept the offer, reject it or negotiate further until an agreement is reached. This form of sale is the most relaxed of the three because there is no set time for offers to be made, compared to when a house is sold by tender. In this case, the seller often will wait to receive the right offer.

It’s important to understand if an agent is involved when selling by negotiation. Because if there isn’t an agent involved, the house is being sold as a private sale. The issue that can occur with a private sale is that there is more chance something can go wrong, since the sellers aren’t professionals. But you may get the house for a cheaper price, since the seller doesn’t have agent fees to pay. If it is a private sale, make sure you get all documents checked, by your lawyer, before making an offer.



Auctions can be pretty scary even if you have been to an auction before. They work by having everyone in a room or onsite at the property, with all interested people biding until there is one bidder left – the highest bidder.

Before the auction a reserve price is set buy the seller and is kept between the auctioneer and the seller. Once the reserve price is met the house will be sold to the highest bidder. So even if you win the bidding and your bid is below the reserve price, it may not sell.

The winning bidder has to pay 10% of the purchase price after the auction. This means that it is important to sort finances before going to an auction. It is also important that you do all you research and due diligence on the property before the auction date, because once the auction closes above the reserve price it is legally binding.

If you are wanting to bid at auction you will also need to register interest with the seller’s agent before the auction happens. And it’s a good idea to go to another auction to experience the atmosphere and understand how they are run before you bid on the house you want, which will also help to ease your nerves on auction day.


Each type of sale has its own slightly different approach to achieve the same result, which is to sell the house. It helps to understand the mindset/motivation of the seller, and if their approaches are more aggressive or relaxed, this will help with negotiation.

To be auction ready get pre-approved for your loan today.

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First Home Buyers, Tips