What is Private Treaty?
Private Treaty is where a property is listed for sale with a purchase price or purchase price range, and is not subject to an auction. It is up to you (the purchaser) to negotiate a mutually acceptable price with the selling agent or vendor (owner of the property).
When a price & the sale terms are agreed on you are said to have “offer & acceptance” to buy the property. You are then usually given a short period of time in which to conduct “due diligence” (unless done prior to the offer), which includes checking of the Contract of Sale by a solicitor or conveyancer, conducting building and pest reports, and undertaking strata inspections (for apartment purchases).
When you are satisfied that everything is in order you will be required to sign a copy of the Contract of Sale and pay a deposit (usually 10%, but can be negotiated).
The vendor will also sign a separate copy of the Contract of Sale after which “exchange” occurs.
Your signed Contract of Sale will be exchanged with the vendor’s signed Contract of Sale. Once this has occurred the property has been officially sold, and you should be aware that until this has occurred there is always a risk of gazumping taking place. This is where another purchaser offers a higher price for the property which is accepted by the selling agent or vendor.
There will usually be a cooling off period during which time the purchaser can effectively terminate the Contract of Sale. This is usually 5 days after contract exchange, but the purchaser must pay the vendor 0.25% of the agreed purchase price as a penalty. If the cooling off period is agreed to be waived at exchange then the solicitor/conveyancer must sign the 66W Certificate and attach it to the contract.
Settlement will usually occur 42 days (6 weeks) after exchange, but this is negotiable between the vendor and the purchaser. At settlement all remaining monies are required (ie, purchase price less deposit & other adjustments).It is important to take into account other “hidden” costs of purchasing a property which may be required prior to settlement, at settlement, or shortly afterwards.
