In a cooling market, sales agents' campaign tend to avoid auctions, in favour of secretive best and final offers or private sale campaigns. What is a Private Sale and how do you successfully buy at Private Sale campaigns? This article will show you the preparations, tricks, and methods to manage this purchase successfully.
What is a Private Sale?
A private sale is a sales campaign where the buyers make their formal offers, usually in writing, without knowing who the other bidders are and without visibility of what their bids are. Sometimes, it may also be called an "Expression Of Interest (EOI)". Some agents may also ask you to "make your best and final offer" (BAFO). So, you can look at this as a Best and Final (BAFO) sales campaign, and follow our guide on winning a BAFO campaign.
Sounds complicated eh? Yes it is one of the techniques agents use to create a sense of urgency and anxiety, hoping the anxiety will cause the buyers to pay more than they should.
What are Other Names for Private Sales?
Private Sale campaign can go by different names. Some of the more common names are:
Simply Single Price $xxx,000
Price Range $xxx,000 - $yyy,000
Expressions of Interests
Offers Above $xxx,000
Simply "Private Sale"
Why are Private Sale Used?
Private Sales have become more common in Melbourne’s quieter market, especially in 2023-2024. They’re often used when a property is not likely to sell via an auction, or when the property is passed in at an auction, as it allows sellers to negotiate with potential buyers more privately and without the pressure of a public bidding war. In fact, if you look hard at the image in this article, you can clearly see this "Private Sale" sticker was put over an unsuccessful "Auction" sign. This particular property was passed in at an auction, and was subsequently re-listed as "Private Sale".
It is also not surprising that a Private Sale is usually the start of a Best and Final Offers, Closed Auction and Opened Auction campaigns. Some readers might be confused into thinking they are the same. While similar, Private Sale has a very significant difference.
Private Sales usually do not have a fixed end date.
Private Sale is also usually just the beginning of the formal offer and negotiation process, when a formal offer is received. Sales agents usually follow this up with a Best and Final Offer (BAFO). So, if you are preparing to make an offer for a property sold as Private Sale, it helps, if you are well prepared for the BAFO process too.
As with the BAFO process, some agents believe this is transparent, and offers are not subject to any negotiations, in theory. In practice, the fear of missing out (FOMO) will usually force buyers to make their best offer. Some novice buyers may even try to squeeze out a few extra pennies to try to outbid other bidders.
But this is not always true, as we will see in the next section.
How do Private Sale work?
There are more than one way to run this Private Sale campaign. But this is what typically happens:
Vendor and Agent decides to sell the property using a Private Sale campaign.
When an offer is received, the agent will present this offer to the vendor.
The vendor may want to start the negotiate to try to get a better price from the buyer, or if the offer is within the acceptable range, this could be the start of the next stage of the campaign, to attempt to achieve maximum price.
What happens next is where it gets interesting and can vary between campaigns, agents or vendors. This is also where the private sales campaign creates the most controversies, anxiety and angst.
The next stage may take one of the following paths:
Vendor may decide that the negotiated price is sufficient, and confirm the sale.
Vendor may decide that the price should be better and decides to either call a best and final offer or board room auction.
In the interest of time, the Best and Final Offer (BAFO) process is usually used, There could be times when the vendor or agent decides to call a boardroom auction process.
Agent tells buyers they have received an offer, and they are to put their best and final offer in by a certain date and time. are holding a "closed auction" and / or to put in their "Best and Final offer"
If the board room auction process is used, refer to our tips to winning boardroom auctions.
Problems with Private Sale Campaigns
As with a typical property purchase, private sale can be deceptively emotional. It may look simple and may not seem complicated. But it is actually more involved than it sound.
This is intentional, as emotions are what cause buyers to think with their heart, and the subsequent fear of missing out (FOMO) will usually lead to buyers overpaying. Inexperienced buyers always fall into this trap. However, this would usually not work with experienced, professional buyers agents.
Private Sale are usually:
deceptive, and is usually overwhelming for the inexperienced buyers, such as first home buyers or buyers who have not done sufficient research
lacking in transparency
conducted with poor levels of communications
Some interested buyers might not be informed that an offer has been received, if they had not made their interests known with the selling agent. Or if the agent believe they have sufficient interested buyers, they may stop informing other less promising buyers, due to time constraints.
How do You Prepare to Buy At a Private Sale?
Treat your preparations for a Private Sale like a preparation for an Open or Public Auction. The tips given in our "How to win at Auctions" [link] will apply to a closed auction as well.
Generally, to be successful at buying a house listed for "Private Sale", you need to:
Do your due diligence.
Doing your homework is the foundation for making a smart purchase. Before you even consider making an offer, take time to assess the property. Ask yourself:
What are your goals for this property?
Does it align with your lifestyle or investment needs?
What’s the market demand in the area for this property type?
Understanding the market is crucial, as it helps you know how desirable the property is and whether it suits your long-term plans. While you have the time to do this thoroughly, do it. Don’t skip it.
Know the real price of the property
Many buyers place too much trust in the Statement of Information (SOI) provided by the agent, assuming it reflects an accurate price guide. However, the SOI is not always a reliable indicator of the final sale price. Prices can exceed the guide, especially in competitive markets.
You should always do your own research:
Look at comparable sales in the same street or neighborhood.
Understand the demand for the specific property type in that pocket.
If your findings are vastly different from the SOI, don’t hesitate to ask the agent why. But be prepared for standard responses like, “It’s based on past data, but we can’t predict how much buyers will pay at auction.”
A skilled, independent buyer’s advocate can offer more accurate price expectations, considering buyer demand, neighborhood trends, and property characteristics.
Determine Your Offer
Now comes the crucial decision: what price should you offer? This is highly personal, but some guidelines can help you get it right:
Know your financial limits: Understand how much you can afford to pay comfortably.
Ensure you have the deposit: In private sales, a 10% deposit is standard, so make sure you have the funds ready.
Assess your loan serviceability: Can your finances handle the property if the price goes above your original budget?
Determine your best offer: Ask yourself: “If the property sells for just $100 more, will I regret walking away?” This is a good litmus test to see if your offer reflects your true limit.
Prepare for the "Private Sale" Offer Game
In Victoria, the concept of the “Private Sale” can be murky. Even after you submit your best offer, agents might come back stating they have received another offer and suggest that you do a final review or an "improvement" on your offer. This often leads to second-guessing.
Keep in mind that you don’t know what the other offers are or whether there are any at all. You might already be the highest bidder, and the agent is simply testing your willingness to pay more. In some cases, you could be bidding against yourself!
If you’ve done your research and prepared thoroughly, you should be confident in your bid. An experienced buyer’s advocate can guide you through this stage, giving you insight into the true competition and helping you avoid overpaying.
By following these steps, you can navigate the private sale process with confidence and increase your chances of securing the property that’s right for you.
Does the best offer in a Private Sale always win?
Short answer: usually yes. But not always.
It depends on the motivations for this Private Sales campaign. The vendors may choose not to select any offers, and let the sales campaign continue, or choose to change the sales method,
Usually, if done properly, a genuine private sale campaign will almost always result in a sale. But it may not always be awarded to the buyer with the best offer. A Private Sale is treated like any other written offer. IE, you CAN submit a conditional offer, which includes conditions such as building and pest inspection clauses, finance clause, or any other clauses you need or can dream of.
It is in the vendor's interest to consider all offers and conditions when reviewing and selecting the offers. They are likely going to select the offer with the most suitable conditions, even if it may not be the highest price. Selling agents may not like it though, as it may mean they are receiving a lower commission.
In situations like this, a good buyers advocate can help you design a competitive offer that balances price and conditions to increase your chances of success.
Top Tips to Make an Offer at a Private Sale
So, you have been contacted by an agent, telling you they have received an offer which is considered acceptable, and they are holding a closed auction, and you have been invited to submit your best and final offer by X date and time. What do you do next?
How to Submit an Offer in a Private Sale?
If you have been contacted and informed by the vendor agent that they will be conducting a closed auction or Best and Final Offer campaign for the property and you are to make your "best and final offer", they should also inform you when the deadline is. You should always ensure you submit your best offer before this deadline.
If the agent has not told you how or when they want to receive the offer, ask them. Make sure you know what the expected format it. Some may accept offers in an email. Some may have a formal offer form or an Expressions of Interest (EOI) form, that you have to fill in, sign and submit. Whatever it is, make sure the offer reaches the agent BEFORE the deadline. The agent is not supposed to accept any offers after the dateline. Not even if you are 1 minute late.
Typically, your offer should include:
Your name
Your contact details
Your best and final offer price for the property
Any conditions you want to include
Settlement date or period, usually 60, 90 or 120 days in Victoria.
Some agents or EOI offer forms may ask for more information. Make sure you understand what is expected, and provide them if relevant.
Submitting a well-prepared offer before the deadline ensures you're in the running, but it’s always a good idea to seek professional guidance, such as from a buyer's advocate, to maximize your chances of success.
What Happens After Submitting Your Best Offer in a Private Sale?
Submitted your offer? Wait. And keep your fingers crossed and hope for the best.
If your offer is being seriously considered, the agent will usually reach out to you whenever they are ready. You might need to be prepared "review your offer" (aka "improve your offer"), or, if you are lucky, you might win it without any dramas.
If your Private Sale Campaign offer is accepted
If you offer is accepted,
The agent will prepare the formal contract of sale for your signature,
You will need to pay the holding deposit.
If your winning offer is a conditional offer, it's time to start ticking off the conditions. Know when these dateline are. Get those building and pest inspection organised, get that finance process started, or get any other due diligence processes done. And as they say, the rest is history.
If you haven’t heard from the agent after 4-6 business hours
Generally speaking, if you have not heard from the agent within 4-6 business hours of the deadline (usually half a working day), your offer is 99% not being considered. If you have done your due diligence correctly, and you can truly put your hand on your heart and say you've genuinely submitted your best offer, you know you have done your best. The property is not meant to be yours. There is always a better one somewhere, but it may take months or even years before to find it.
Keep in mind though, you will have to go through the same search, inspect, due diligence and buy processes and experience the anxiety all over again. And chances are, in a rising market, you will need to pay more for the same property or start looking in less desirable suburbs.
If you have not heard from the agent after 4 hours, call them, ask for an update. If you get a vague reply, or a non-committal reply, chances are, they have selected other offers. That's usually the bad news. But the good news is, because they have not formally rejected your offer. Your offer is likely their back up.
If the other offers fall through, you might just win the private sale campaign or you might need to start your negotiation and be called to "improve your Best and Final Offer". The fact is, in a hot market with lots of keen buyers, or if other buyers have the guidance of professionals such as a buyers agents, you are highly unlikely to win it.
Do Sales Agents Usually Prefer to Work With Buyers Agents?
As a side note, vendor agents (sales agents) secretly prefer to work with buyers agents because of the quality of the client and offer. Buyers agents like us only work with qualified leads, who are ready to buy. We have done our due diligence and our offers are much more realistic, and thus, they have to spend less time to confirm the sale.
If you have done the right due diligence, your offer for this Private Sale campaign should be your very best for this property. You should not have any "buyer's remorse" or "failure's remorse" and you would not have regretted not offering an extra $500 more. Do not be that buyer. Get one of our professional buyers agents to manage your offer, if you are not confident.
Professional Help to Successfully Buy in Private Sale is Available
If you're still uncertain how private sales campaign works, or not confident with your preparations, or just want the confidence to buy the property, it might be time to consider engaging the services of a buyer's agent.
Our Melbourne based Buyer's Advocacy service prevents buyers from overpaying, and helps buyers buy their properties with confidence.
Get in touch, find out if our services are right for you.
More home and investment property buying news and tips here.
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