In Australia, there are basically two ways that property is sold - Private Treaty or Auction. You may have seen properties advertised as ‘For Tender’, ‘POA’, ‘Offers to purchase’, ‘a set price such as $795,000’, ‘By negotiation’ and everything in between. Technically speaking, all of these strategies fall under the Private Treaty method of selling a property. Whilst the method used to arrive at a price which the seller and buyer can agree on may vary, the terms of the contract are generally the same.

The other way of selling property is by Auction. This method generally requires a real estate agent to announce to the public, by advertising that the property is available for purchase, and the option to purchase this property is at a set date and time. The property sellers set a figure that they are happy to sell the property for (the reserve) and this figure is disclosed only to the auctioneer who facilitates the auction – the reserve is never publicly advertised. All those who are interested in purchasing the property gather at the designated time and place for the auction and publicly announce their offers (bid) to the auctioneer. 

Once the auction commences, an opening bid is called for and once the first bid is made, bidders (buyers) continually raise their bid until the highest bidder has been established. If the highest bid is below the reserve, then the auctioneer will refer to the seller for further instructions. This may be to sell (accept the offer) or ‘pass the property in’ (not accept the highest offer). If the highest bid is above the reserve (after the bidders have ceased increasing bids), then the auctioneer will generally ‘knock down the hammer’ and the property is sold to the highest bidder. A sale by auction is unconditional, meaning there is no cooling off period, no finance condition, no building and pest condition or any other condition the buyer may want to impose on the seller. In other words, it is sold as is.