Which path to take? Auction or private treaty?
So you’ve decided to sell your property. Now comes one of the biggest choices you’ll need to make – auction or private treaty.
Both selling methods have their pros and cons, but Benjamin Martin of Belle Property Balmain says making the right call depends on your particular circumstances.
Benjamin, who’s operated in the ultra-competitive Sydney market since 2010, says auctions can benefit sellers because the competitive pressure often pushes up sale prices.
“Ready buyers are forced into making a decision with the deadline and urgency created with the auction date,” he tells Legacy Property.
“Interested buyers may stretch themselves under a competitive environment to buy their dream home.”
Other advantages of auctions for vendors, Benjamin says, are the impact of the auctioneer on sale price and the legal certainty that the process delivers.
“The auctioneer’s skills, energy and enthusiasm can increase the sale price (and) the successful buyer at auction enters into an unconditional sales contract.”
However Benjamin concedes that for other sellers a private treaty may be the preferable option. He says it’s especially the case for vendors who prefer a less intense process.
“Auctions can be overwhelming for many vendors,” Benjamin says.
“A private treaty approach can be beneficial as the sales process moves at a much slower pace and the parties have time to consider their position.”
Another upside, he says, is that a private treaty can effectively screen out uncompetitive buyers versus the less controlled environment of an auction.
“Having a set price or price range associated with the property effectively helps to pre-qualify potential buyers.”
In 2018, Benjamin predicts more Sydney vendors will opt to sell via private treaty due to predicted lower auction clearance rates.
Sydney’s clearance rate was a robust 82 per cent on the last weekend in January, but only 22 were held.
Benjamin says with Sydney clearance rates recently sitting around 50 per cent, it’s clear that auctions are not working out for all properties.
“While a majority of passed-in properties will sell shortly after auction, the stigma of an unsuccessful auction should be avoided if possible,” Benjamin adds.
“A private treaty sale can take the best elements of an auction campaign but remove the risk of an unsuccessful auction.
“For many properties, the auction method will continue to be the best choice but as more and more properties come on to the market this year, it is worth considering all options.”