"Whether you're a buyer, seller or agent, understanding these variations is essential to ensure you get the best result come sale time."
Australia’s real estate landscape is diverse, with each state having its own legislation and market characteristics. This diversity extends to the conditions and processes that apply when buying and selling.
From deposits to cooling-off periods, contract structures, sales methods and rent returns, we’ve uncovered the top five differences between the east and west coast markets.
Whether you're a buyer, seller or agent, understanding these variations is essential to ensure you get the best result come sale time.
Note: Many of the differences referred to relate to the New South Wales and Victorian markets, with Queensland’s market often likened to WA.
One of the first key distinctions between the WA and east coast markets is the methods of selling.
Private treaty sales with standardised contracts are the most common way to sell in WA, with both buyers and sellers preferring this process due to its consistency. Private treaty sales allow buyers to include conditions such as subject-to-finance or subject-to-sale clauses in their offers. Auctions are less common and usually require buyers to be unconditional, ie. cash buyers or with finance pre-approved.
On the other hand, the Eastern States use a mix of auctions and private treaty transactions. Auctions are common and buyers prefer them as they prevent a tactic called ‘gazumping’. This is where a seller accepts a higher offer despite having already accepted a previous offer. With this in mind, auctions provide certainty for both east coast buyers and sellers. Both parties know that once the hammer falls, the deal is done.
Gazumping does not occur in WA. Once an offer is accepted, the seller cannot take up another offer. The exception is where the buyer’s offer is subject-to-sale of another property, and the contract includes a 48-hour clause. In this instance, if the seller receives what they consider to be a better offer, they can invoke the 48-hour clause and the buyer has 48 hours to make their offer unconditional.
Another notable difference between the east and west is the presence of cooling off periods in some states, which allow the buyer to withdraw from a private treaty transaction, however penalties will apply. East coast buyers often benefit from a period of up to five days during which they can reassess their decision and review their financial situation. There is no cooling off period for auctions.
In contrast, WA transactions don't incorporate a formal cooling off period. Once a contract is signed, the parties are bound, which provides certainty for sellers. The exception to this is where the buyer is unable to obtain finance, where a conditional sale would then fall through.
In WA, REIWA has developed standardised contracts which are widely used across the market, and regularly updated to reflect changes in legislation. This makes the process more streamlined and transparent for both buyers and sellers.
In the Eastern States, it’s a different ballgame. Sellers often engage solicitors to craft personalised contracts with terms that favour them. These seller-centric contracts can catch buyers out, so it is often recommended that WA buyers investing in east coast markets enlist a buyer’s agent or solicitor who understands the market and the terms used in these contracts.
When it comes to deposits, buyers in WA have the advantage of being able to offer smaller sums than their east coast counterparts. In a private treaty sale, WA buyers often aren’t required to pay a fixed percentage as a deposit. It is generally between $10,000-20,000 when the contract has been accepted, giving them greater flexibility and allowing them to keep more cash in hand throughout the sale process. Auctions usually require a 10 per cent deposit on the day.
Over east, sellers typically demand a more substantial deposit, commonly set at 10 per cent of the property’s purchase price. For a $600,000 property, this would equate to $60,000. For some, especially first-home buyers, this could be incredibly challenging and potentially delay their purchase.
Note: the deposit paid when an offer is accepted is not the same as the deposit lenders require when buyers apply for a loan.
East coast investors are often delighted by Perth’s rental yield. A number of investors choose to invest in WA over the Eastern States because of the confidence they have in getting a good return. For WA investors, choosing to spend in their own backyard might be a better choice than investing over east.
For example, a property in Perth’s CBD that could receive $650 per week in rental income might be worth $450,000-500,000. An equivalent property in Sydney could cost upwards of $700,000. This difference becomes a critical consideration for investors evaluating their opportunities in either region.
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