Sell

Treaty or Auction?


Selling Property- Private Treaty or Auction ?

It is important to note that there is no single best way to sell your property.

Each property and owner is different and each situation should be considered individually. Having said that, Ray White’s Box Hill experience confirms that the two most successful and popular methods of sale are private treaty (for sale) and auction. In fact, both can and do yield excellent results when accompanied by the right marketing campaign and skillful negotiation by the agent.

You should choose the method best suited to your circumstances. Are you in a hurry to sell or maybe you can wait an extra month or so? Do you want to make sure you get the best possible price or are you happy to decide on a figure and market your property at that price? Ask our agent to compare the success of each method.

In brief here is how the two methods work.

Private Treaty

Your property goes onto the market with a predetermined asking price agreed between you and our agent and based on market analysis. Ray White Box Hill will have presented you with a
Comparative Market Analysis. This will show you at least three properties sold within the last six months and that are similar standard of condition and are within five kilometers of the property.

In most cases and markets, this price, or a guide to it, is publicly stated. There is no official sale date. Your marketing strategy may vary in the use of some or all of the tools at your disposal, depending on your individual situation, budget and time frame.

Potential buyers will either accept the predetermined price or, more likely, start by making a lower offer. Ray White Box Hill will handle the negotiations which will be aimed at raising the offered amount to your predetermined price or, possibly, higher if more than one buyer is interested. In most markets there is a “cooling off period”, during which the purchaser may withdraw with a minor penalty, following acceptance of the offer.

This method of sale can be effective in the long term and targets buyers who want to visit properties in a specific price range. It allows you, the seller, to assess market interest in a calm atmosphere and make any adjustments to your campaign and sale price that seem appropriate.

It is also attractive to those buyers who feel they are more likely to succeed with this method than bidding publicly in the competitive atmosphere of an auction where they could also risk spending more than they’d intended.

Some considerations about this method include:

  • the predetermined price will generally turn out to be the maximum paid or the basis of lower offers
  • the open-ended time frame can result in the property being on the market for a longer time increasing advertising costs

Note, if your property is on the market for a long time and has several price reductions, it may give buyers the idea there is something about it that makes it hard to sell, which is why a good promotional campaign can be very important.

Auction

Auctions are highly focused marketing campaigns designed to expose your property to the maximum number of buyers, maximise your sale price and minimise the number of days your property is on the market. Your property is put up for sale on a specified date and this is preceded by a high impact marketing campaign and selected “open days” all of which indicate your commitment to selling.

The contract of sale is on your terms and the conditions of the sale are predetermined. The nature of the marketing campaign means that Ray White Box Hill will be able to give you regular feedback from buyers in the market. This makes you well informed on auction day and assists in setting the reserve price.

The impending auction date can create a sense of urgency and ‘call to action’ amongst buyers. You are not obliged to accept an offer that does not reach your reserve price. You can, however, decide to negotiate with the highest bidder(s).

Auctions offer extra opportunities for the sale of your home because an offer can be made before, at or after the auction. Once a sale is made, either by accepting an offer in writing before auction day, or at the fall of the hammer on the day itself, the buyer must pay a 10% deposit then and there and at the same time execute the contract.

This method of sale puts a clear time frame on your campaign and creates a competitive atmosphere on auction day that is aimed at letting the market determine the highest price for your home.

Some considerations about this method include:

  • the chance that some potential buyers will be excluded, in particular those who don’t want to risk losing money on the cost of building, pest and other inspections if they are outbid
  • the removal of a stated price opens your home to a much broader range of buyers

The right method of sale for you will become apparent once you are armed with a better understanding of the methods of sale and often discussing all relevant issues with an agent from Ray White Box Hill.