Buying at Auction vs Private Treaty: Which Is Better in Australia?

In Australia, properties are sold through two primary methods: auction and private treaty. Each has distinct rules, advantages, and risks — and the method that works best for you depends on your financial position, risk tolerance, and the market you are buying in. Understanding the differences between the two is essential for making an informed purchasing decision.

This guide compares auctions and private treaty sales across every dimension that matters to buyers, including legal protections, deposit requirements, conditions, pricing transparency, and emotional factors.

How Each Method Works

Auction

At an auction, registered bidders compete openly by making progressively higher bids on a set day and time. The property is sold to the highest bidder once the reserve price (the minimum the vendor will accept) is reached. The sale is legally binding the moment the hammer falls — no cooling-off period applies.

Auctions are typically conducted on-site at the property, though online and in-room auctions have become more common. The entire process from opening bid to contract signing usually takes 30 to 60 minutes.

Private Treaty

In a private treaty sale, the vendor lists the property with an asking price (or price range), and buyers submit offers through the real estate agent. The vendor can accept, reject, or counter any offer. Once an offer is accepted, both parties sign a contract of sale and the buyer typically has a cooling-off period (which varies by state).

Private treaty sales can take days, weeks, or even months from listing to exchange. There is no set deadline, and the vendor can negotiate with multiple buyers simultaneously.

Cooling-Off Rights

This is one of the most critical differences between the two methods:

• Auction: No cooling-off period. The contract is unconditional and binding from the moment the hammer falls. You cannot change your mind, and you cannot add conditions after the sale.
• Private treaty: A statutory cooling-off period applies in most states — typically 2 to 5 business days after exchange of contracts. During this period, you can withdraw from the contract, though you will usually forfeit a penalty (0.25% in NSW, 0.2% in VIC) of the purchase price.

The cooling-off period in private treaty sales provides a safety net that simply does not exist at auction. For buyers who are still finalising finance, awaiting inspection results, or who want time to reconsider, this protection is valuable.

Deposit Requirements

• Auction: The full deposit (typically 10% of the purchase price) is payable on auction day. Some agents will accept a smaller amount on the day (e.g., $1,000-$5,000) with the balance due within 1-2 business days, but this must be agreed in advance and specified in the contract.
• Private treaty: The deposit amount is negotiable. While 10% is standard, buyers often negotiate a lower deposit — 5% is common, and some vendors will accept even less. The deposit is usually payable at exchange of contracts.

Conditions and Subject-To Clauses

This is where private treaty sales offer a significant advantage for buyers:

• Auction: The contract is unconditional. You cannot include subject-to-finance, subject-to-building-inspection, or any other conditions. All due diligence must be completed before the auction.
• Private treaty: You can include conditions in your offer, such as:
  • Subject to satisfactory building and pest inspection
  • Subject to finance approval
  • Subject to sale of your existing property
  • Subject to satisfactory strata report
  These conditions protect you from being locked into a contract if something goes wrong.

The ability to add conditions is one of the strongest arguments for private treaty, particularly for first-home buyers who may not have the experience or financial buffer to manage the risks of an unconditional purchase. Use Realestate Lens's contract analysis to ensure the conditions in your contract adequately protect your interests.

Price Transparency

• Auction: Highly transparent. You see exactly what other buyers are willing to pay in real time. The final price is determined by open competition, which means the market sets the value. However, you do not know the reserve price until the auctioneer declares the property "on the market."
• Private treaty: Less transparent. You do not know what other buyers have offered (the agent may tell you there are competing offers, but you cannot verify this). The asking price is a guide, but the final price depends on negotiation — some properties sell below asking price, others well above.

Emotional and Psychological Factors

The emotional dynamics of each method are very different, and understanding them can help you make better decisions:

• Auction: The competitive, public nature of auctions can trigger emotional bidding. The fear of missing out (FOMO), peer pressure from other bidders, and the adrenaline of the event can push buyers well beyond their planned budget. Setting a firm maximum bid and sticking to it is essential — and difficult.
• Private treaty: The negotiation process is more measured. You have time to consider your offer, discuss it with your partner or advisor, and respond thoughtfully rather than reactively. However, the lack of a deadline can create its own anxiety — the fear that another buyer will swoop in while you are deliberating.

Which Is Better for Buyers?

There is no universally "better" method — it depends on your circumstances:

• Private treaty is generally better for:
  • First-home buyers who need subject-to-finance protection
  • Buyers who have not yet completed inspections
  • Buyers who need the cooling-off safety net
  • Those who find auction pressure stressful or counterproductive
  • Buyers in a slower market with less competition
• Auction may be better for:
  • Cashed-up buyers with unconditional finance pre-approval
  • Buyers who value price transparency and a definitive outcome
  • Competitive markets where private treaty offers are likely to be gazumped
  • Buyers with experience in property purchases

Which Is Better for Sellers?

Sellers tend to prefer auctions in strong markets because competitive bidding can drive the price above what a private negotiation might achieve. However, in weaker markets, an auction that fails to meet the reserve can stigmatise the property — a "passed in" result signals to future buyers that the vendor's expectations exceed market value.

Private treaty sales give vendors more control over the timeline and the ability to accept conditional offers, which can widen the pool of potential buyers.

City Differences: Auction Culture Varies

The prevalence of auctions varies significantly across Australian cities:

• Melbourne: Australia's auction capital. A very high proportion of properties in the inner and middle suburbs are sold at auction, with clearance rates closely watched as a market indicator. Saturday auction days are a cultural institution.
• Sydney: Auctions are common in the inner city, eastern suburbs, north shore, and inner west, though private treaty is more prevalent in outer suburbs and regional areas.
• Brisbane: Historically a private treaty market, though auctions have grown in popularity during recent boom periods. Private treaty remains the dominant method.
• Perth: Predominantly private treaty. Auctions are relatively uncommon and are typically reserved for unique or high-value properties.
• Adelaide, Hobart, Canberra, Darwin: Mostly private treaty, with auctions used selectively.

Tips for Buyers Regardless of Method

1. Complete your due diligence early. Whether buying at auction or private treaty, inspections, contract reviews, and finance arrangements should be done as early as possible.
2. Know your maximum price. Determine the most you are willing to pay, including all associated costs like stamp duty, legal fees, and inspections.
3. Get the contract reviewed. Have your solicitor or conveyancer review the contract of sale before you commit — regardless of the sale method.
4. Understand the local market. Use property research tools to understand comparable sales, suburb trends, and realistic pricing.
5. Consider a buyer's agent. In competitive markets, a professional bidder or negotiator can help you secure a property without overpaying.

For a detailed walkthrough of the auction process, see our guide to buying at auction. To understand the clauses in your contract of sale, try Realestate Lens's AI-powered contract analysis.