Auction and private treaty sales: a guide for first home buyers

Most Australian homes are sold in one of two ways. In a private treaty sale, the property is listed with a price or price guide and the buyer negotiates with the seller, usually through an agent, and can often include conditions and a cooling-off period. At an auction, buyers bid openly against each other and the highest bid at or above the seller's reserve wins, with a contract that is generally unconditional and final when the hammer falls.

For a first home buyer, the difference is mainly one of timing and risk. In a private treaty purchase, much of the checking can happen after the contract is signed. At an auction, all of it must be finished beforehand. The rules are set by each state and territory.

How a private treaty sale works

The seller lists the property with an asking price, a price range or an invitation to make offers. A buyer makes an offer, which the seller may accept, reject or counter. Negotiation can cover the price, the settlement period, inclusions, and conditions such as finance approval or a satisfactory building inspection.

An accepted verbal offer is generally not binding. Until the contract is signed by both parties and, in New South Wales, exchanged, the seller can usually accept a higher offer from another buyer. After signing, a statutory cooling-off period applies in most jurisdictions.

How a property auction works

An auction is a public sale run by an auctioneer on a set date, usually after a marketing campaign of several weeks. The seller sets a confidential reserve price. The main features are similar across Australia, although registration and conduct rules differ:

• Registration. In New South Wales, the NSW Government states that bidders must register with the selling agent and show identification with their name and address before they can bid. Registering does not oblige a person to bid.
• Bidding. The auctioneer sets the bid increments and may refuse a bid. Consumer Affairs Victoria notes that a vendor bid is lawful only when it is announced and made by the auctioneer, and that false or "dummy" bids are illegal.
• On the market. Once bidding reaches the reserve, the auctioneer usually announces that the property is on the market, and it will sell to the highest bidder.
• Fall of the hammer. The highest bidder must sign the contract and pay the deposit immediately. There is no cooling-off period, and conditions cannot be added unless the seller agrees.

Auction and private treaty compared

Feature	Private treaty	Auction
Price discovery	Private negotiation, other offers are not visible	Open competitive bidding
Cooling-off period	Applies in most states and territories	Does not apply
Finance condition	Can usually be negotiated	Generally not available
Building and pest condition	Can usually be negotiated	Inspections must be completed before bidding
Deposit	Negotiable, paid at or soon after signing	Usually 10 per cent, paid on the day
Main risk for the buyer	Losing the property to a higher offer before contracts are signed	Being bound to buy without finance or inspection protection

Cooling-off rights by state and territory

A cooling-off period allows a buyer to withdraw from a signed contract within a short time, usually at a small cost. The summary below reflects guidance published by each government agency, the South Australian Law Handbook and, for the Australian Capital Territory, the legislation itself, as at September 2026. In every jurisdiction listed, the cooling-off period does not apply to a property bought at auction.

Jurisdiction	Cooling-off period for private sales	Cost of withdrawing
New South Wales	5 business days from exchange, ending at 5pm on the fifth business day (10 business days for off-the-plan contracts)	0.25% of the purchase price
Victoria	3 clear business days from the day the buyer signs	The greater of $100 or 0.2% of the purchase price
Queensland	5 business days from the day the buyer receives a copy of the signed contract	The seller may keep up to 0.25% of the purchase price
South Australia	2 clear business days from service of the Form 1 disclosure statement	Any deposit above $100 must be refunded
Australian Capital Territory	5 working days from the day the contract is made	0.25% of the purchase price
Western Australia	No mandatory cooling-off period. One exists only if both parties agree to write it into the contract	Not applicable

The official Tasmanian and Northern Territory consumer agency pages could not be accessed when this article was prepared, so no figures are stated for them here. Tasmania is generally understood not to have a mandatory statutory cooling-off period, and the Northern Territory is generally understood to provide a short statutory period for sales other than by auction. Buyers in those jurisdictions should confirm the current position with Consumer, Building and Occupational Services Tasmania or Northern Territory Consumer Affairs, or with a local solicitor or conveyancer.

Exceptions that catch buyers out

• Sales close to an auction. Consumer Affairs Victoria states that the cooling-off period does not apply to a property bought within three business days before or after a publicly advertised auction. In New South Wales and the Australian Capital Territory, it does not apply to a contract made on the same day as an auction at which the property was passed in. Queensland excludes certain sales to registered bidders shortly after an auction.
• Waivers. In New South Wales a buyer can waive the period by giving the seller a section 66W certificate, and agents in competitive markets sometimes request one. In the Australian Capital Territory and South Australia, a waiver requires a certificate from a lawyer. In Queensland a buyer may waive or shorten the period in writing.
• Notice. Withdrawal must be in writing and delivered before the deadline. The South Australian Law Handbook notes that the buyer carries the burden of proving that notice was given on time.

Illustrative example: deposit and cooling-off cost

The following hypothetical figures show the amounts involved on an $800,000 purchase.

• A 10 per cent deposit payable on auction day would be $80,000.
• Withdrawing during cooling-off in New South Wales or the Australian Capital Territory, at 0.25 per cent, would cost $2,000, which is also the maximum in Queensland.
• Withdrawing in Victoria, at the greater of $100 or 0.2 per cent, would cost $1,600.
• Withdrawing in South Australia would cost no more than $100 of any deposit paid.

By contrast, a buyer who cannot complete an unconditional auction contract risks losing the whole $80,000 deposit and may also be liable for the seller's losses.

Finance clauses and why they matter

A "subject to finance" condition allows a buyer to end a private treaty contract if the loan is not approved by a stated date. It matters because a pre-approval is conditional and can be withdrawn after the lender values the property. The BorrowWise blog explains how pre-approval works in more detail.

Points to check in the wording include:

• the named lender, since Consumer Affairs Victoria advises buyers always to nominate a lender in the contract
• the loan amount, which should match what is actually needed
• the approval deadline, which should be realistic, and the process for requesting an extension
• how and when notice must be given if finance is declined.

Practice varies by jurisdiction. Consumer Protection WA describes finance and inspection conditions as a normal part of an offer in Western Australia, where there is no cooling-off period to fall back on. At auction, Consumer Affairs Victoria states that conditions such as finance cannot be added unless the seller agrees. Buyers can test their limit beforehand with the borrowing power calculator and the property affordability calculator.

Building and pest inspections

An independent building and pest inspection identifies structural defects, moisture, termite activity and other problems that are not visible at an open home. For apartments and townhouses, a strata or body corporate records report shows the financial position of the owners corporation, planned levies and known building defects.

• Private treaty: the inspection can be arranged before making an offer, during the cooling-off period, or as a condition of the contract, giving grounds to renegotiate or withdraw.
• Auction: NSW Government guidance recommends obtaining building and pest reports and having a solicitor or conveyancer review the contract before bidding. The cost is not recovered if another bidder wins, so buyers may pay for several reports before succeeding.

Paying the deposit on the day

At auction, the NSW Government and Consumer Affairs Victoria both describe the deposit as usually 10 per cent of the purchase price, payable immediately. Buyers should ask the agent in advance which payment methods are accepted and check bank transfer limits. A lower deposit can sometimes be agreed with the seller, but only if it is arranged in writing before the auction.

In a private sale the deposit is negotiable. Consumer Protection WA notes that no deposit is mandatory in Western Australia and that it would generally not exceed 10 per cent. Consumer Affairs Victoria explains that a deposit is held in a trust account until settlement. Buyers using a small deposit should confirm that enough cash is available for both the contract deposit and stamp duty. The deposit calculator can help with planning.

What happens when a property is passed in

If bidding does not reach the reserve, the auctioneer passes the property in. According to the NSW Government and Consumer Affairs Victoria, the highest bidder then usually has the first right to negotiate with the seller. If no agreement is reached, the property often continues as a private treaty listing.

The key trap is the status of a contract signed straight after a passed-in auction. In New South Wales, Victoria and the Australian Capital Territory, a sale concluded on the day, or in Victoria within three business days, carries no cooling-off period. A buyer in that position may still ask for a finance or inspection condition, because the sale is now a negotiation, but the seller is free to refuse.

Preparing for either sale method

1. Arrange pre-approval and ask the lender whether the specific property is acceptable.
2. Research comparable sales through the suburb profiles and set a firm limit before negotiating or bidding.
3. Have a solicitor or conveyancer review the contract before signing or bidding.
4. Complete building, pest and strata inspections at the right time for the sale method.
5. Confirm the cooling-off rules with the consumer affairs or fair trading agency in the state or territory where the property is located.
6. Have the deposit available in the required form.

This article is general information only and is not legal advice. Contract law and consumer protections differ between jurisdictions and change over time, so a local solicitor or licensed conveyancer should confirm the position for a particular purchase. The first home buyer hub covers the other steps in the process.