In a property landscape even industry veterans have never witnessed before, what are the pros and cons of an auction strategy versus private treaty?
With more buyers and less properties for sale, there is no denying it’s a sellers’ market. It’s common to receive multiple offers on new properties hitting the market and if buyers miss the first inspection, they may find the property is already under contract.
The auction process can feel stressful for buyers as there is no clear price indication. However, buyers shouldn’t be put off by an auction as it’s the most transparent way to conduct the sale of a property. The buyer knows exactly what others are bidding and willing to pay, and the seller can be assured they received the highest price the market was willing to bear. In a multi-offer situation, the agent can’t give an indication to any parties on what another may be offering.
However private treaty—where a property is marketed with a list price—also has a place in today’s market conditions.
An agent’s number one priority is to create the highest price possible for their vendor’s property and with the conditions to suit them. The private treaty method gives the seller more time to consider each offer as it is presented. Sometimes the buyer who will pay the highest price may still need a finance clause or want to do a building and pest inspection. These are conditions that cannot be negotiated under an auction process.
Buyers often prefer private treaty as it provides more certainty on whether a property will be within their budget. The risk for the seller is that the contract will usually be conditional for a few weeks after it is signed, although there are situations when a private treaty sale happens quite quickly with very few conditions. In an auction situation, the seller receives a cash unconditional sale with no cooling off period.
In an ever-changing market it’s vitally important to work with an agent you can trust and who you know is always acting in your best interest.
Emma Bauer is the owner of Coastline Realty. She also has experience in conveyancing and interior design.