Auction or private treaty

    Weighing up which is the best way for you to sell your home

    It’s a question which vexes everyone selling their home – do we go for the excitement and finality of an auction or go the more low key route with a private treaty sale? Every agent professes to have the ultimate answer to this dilemma, whilst sellers feel it’s about the house, its presentation, position and other variables.

    In reality, both are wrong. Private treaty is actually the first stage of the auction process – it’s just the auction tag adds a deadline for buyers and sellers.

    Private Treaty – more and more these days there’s no initial price to give the buyer opportunity to place an offer whilst also giving the owners a feel for what is a crazy market. With offers on the table, owners have choice whilst buyers are placed into what can be a silent auction with no real clarity or certainty.  

    Pros for buyers

    • there can be a cooling off period with low deposit of only 0.25%
    • this gives you time to shop around but still secure a home

    Cons for buyers

    • no deadline in acceptance
    • can’t see the other buyers nor know where they’re up to with offers

    Pros for sellers

    • perceived less stressful as no D-day

    Cons for sellers

    • may have no deadline in time
    • deal may crash due to building and pest inspection or valuation

    Auction – on the other hand does set more of an open forum on a specific date where emotion does sometimes take over, pushing the price further north. On the flip side it sets a clear indication of the market and level of buyer competition, and remember, the home can sometimes still sell prior to auction day.

    Pros for buyers

    • you can see your competition on the day
    • you can offer before the day
    • at the fall of the hammer if you’ve hit reserve or higher, you’re successful

    Cons for buyers

    • no cooling-off period so do your checks in advance (contract and building inspection)
    • if the seller has not done a building and pest inspection, then there is an outlay to get one done on your behalf without certainty you will be successful
    • you won’t know the reserve
    • the deposit has to be paid at the fall of the hammer so be prepared. It is typically 10% unless agreed prior.

    Pros for sellers

    • there is a set end date
    • emotion of the buyers may take over
    • prices may get inflated through competition
    • unconditional sale so no cooling off period

    Cons for sellers

    • more intense campaign with shorter time frames of three to four weeks. Stronger focused marketing required.

    Not all agents do auctions nor recommend them due to the lack of understanding or support. Those that do should have knowledge of recent sales to discuss with buyers. Still there are agents “underquoting” the value of the property to hook buyers, which is illegal, or quoting a price but for buyers it shouldn’t be about this, what the agent thinks nor even what the owner wants – but more about what they would be happy to pay to secure their dream home.

    _____________________________________________________________________Dion Verzeletti, Director and Selling Principal of Ray White Thornleigh, Cherrybrook, West Pennant Hills and Pennant Hills, has been selling homes for over 10 years.

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