Every property in Victoria is sold through one of a handful of methods: private sale (also called private treaty), public auction, expression of interest, or tender. Each method gives the buyer a different set of legal protections, and choosing how to engage depends on understanding those differences.
This guide compares the two most common methods — private sale and auction — from the buyer's perspective, with reference to the relevant Victorian legislation.
How a private sale works
In a private sale, the vendor sets an asking price (or price range) and the buyer makes a written offer. Negotiations go back and forth until both parties agree on a price and terms. The buyer then signs the Contract of Sale.
Under Section 31 of the Sale of Land Act 1962, private sale buyers receive a three business day cooling-off period after signing. During this time, the buyer can withdraw from the contract by forfeiting 0.2% of the purchase price (for example, $1,400 on a $700,000 property).
Critically, private sales allow the buyer to include special conditions in the contract — such as subject-to-finance, subject-to-building-inspection, or subject-to-the-sale-of-another-property. These conditions give you exit rights if specific criteria are not met.
How an auction works
At a public auction, registered bidders compete openly. The auctioneer conducts the sale on behalf of the vendor. Once the bidding reaches the reserve price, the property is “on the market” and the highest bidder wins.
There is no cooling-off period for auction purchases. There is no ability to include subject-to-finance or any other conditions. The contract is binding the moment the hammer falls, and the buyer must pay the deposit (typically 10%, so $70,000 on a $700,000 property) on the day.
Vendor bids are permitted up to the reserve price under the Estate Agents Act 1980, but must be declared. Dummy bidding by third parties is illegal.
Side-by-side comparison
Here is how the two methods compare on the key issues that affect buyers:
- Cooling-off period: Private sale — 3 business days (can withdraw for 0.2% penalty). Auction — none.
- Subject-to-finance: Private sale — yes, commonly included. Auction — not available.
- Subject-to-building-inspection: Private sale — yes. Auction — not available.
- Deposit: Private sale — typically 5% to 10%, negotiable. Auction — usually 10%, payable on the day.
- Negotiation time: Private sale — days or weeks. Auction — minutes.
- Price transparency: Private sale — limited (you may not know other offers). Auction — full transparency (open bidding).
- Gazumping risk: Private sale — possible (vendor accepts a higher offer before you sign). Auction — none (highest bidder wins).
When private sale is better for buyers
Private sale gives you more protection and more time. It is generally better when:
- You need a subject-to-finance clause because your pre-approval has conditions or your borrowing is close to your limit
- You want to make the purchase conditional on a satisfactory building inspection
- You want the safety net of the cooling-off period
- You prefer to negotiate without the emotional pressure of a public auction
When auction can work for buyers
Auctions are not always bad for buyers. They can be advantageous when:
- You want price transparency — you see exactly what others are willing to pay
- You have unconditional finance and a strong cash position
- You want certainty — no risk of being gazumped by a late offer
- The property is priced below market and you expect to compete
Other sale methods
Beyond private sale and auction, Victorian properties are also sold by expression of interest (EOI) and tender. Both involve sealed written offers submitted by a deadline. They share some characteristics with private sales — you can include conditions in your offer — but they are less transparent because you do not see competing bids.
The legal framework
The key legislation governing property sale methods in Victoria is the Sale of Land Act 1962. Section 31 provides the cooling-off rights for private sales and explicitly excludes auction purchases. Section 27 provides rescission rights if the vendor's statement is defective, regardless of sale method. The Estate Agents Act 1980 regulates the conduct of agents and auctioneers, including rules around vendor bidding and dummy bidding.
The bottom line
Private sales give buyers more legal protection, more time, and more negotiation power. Auctions offer transparency and finality but remove your safety nets. Whichever method you encounter, the critical step is the same: get the Section 32 and contract reviewed by a professional before you commit.
Ready to check your contract? Upload your Section 32 or Contract of Sale at precontractreview.com for a pre-contract check — typically in just a few minutes.