Why you should choose by private treaty

Selling by private treaty is the most popular way to sell your home and is a great alternative to the tension-filled experience of watching your home go under the hammer at auction.

By Steve Lowe

16-12-2019
Selling by private treaty is the most popular way to sell your home and is a great alternative to the tension-filled experience of watching your home go under the hammer at auction.

Private treaty sales are favoured by sellers and their agents who feel a property’s ultimate sales price will benefit from a slower, more methodical marketing approach. In fact, approximately 75% of properties sell by private treaty.

Negotiation with potential buyers is conducted in private and in a timely fashion rather than be subjected to the stress of immediacy that comes with an auction.

An agent can use the more relaxed approach of a private treaty to conduct negotiations with various prospective buyers that will help define the true market value of the property.

At the beginning of this process, the owner and agent may agree to what is known as a preview price guide.
While the agent will have a good sense of market value, it is not necessary for them to disclose a specific price early in negotiations but instead get a sense of what a buyer might pay.

If a suitable buyer has not been found, then that preview price might be modified and then made public when the property is finally advertised.

Private treaty sales are often preferred by those who want some control over the final price of their property and don’t believe the pressure of an auction and who attend on the day is necessarily the best way to determine the value of the property.

There is some logic to this. It is difficult to be confident that true value is achieved at an auction because the process delivers a result at a single moment in time, which is often influenced by factors such as the number auction attendees and their behaviour.

Private treaty sales are often favoured in a less than buoyant market and by sellers who are in no hurry to settle. This approach provides an opportunity for greater flexibility over settlement periods and allows buyers who might not yet have all their finances in place to enter negotiations in good faith.

The key elements are approaches to private treaty sales are:
- A fixed price tends to attract genuine buyers who are seeking a property in that price bracket
- Price is determined by negotiations with interested buyers rather than within the helter-skelter action of an auction
- The slower pace gives a real estate agent time to obtain a better assessment of market value of the property
- Price can be made public or provided on the application
- Good faith negotiations can be conducted with those who have not yet obtained suitable finance, but there is no time limit on the sale, unlike an auction. So, time on market might be longer.