Auction or private treaty: what’s the better option for you? – John McGrath

If you’re planning to sell this Autumn, you and your agent will need to decide whether you’ll sell via auction or private treaty. Some agents will advise you that an auction’s competitive atmosphere guarantees the best price. Others will say a private treaty sale is the more effective way to achieve this.

While there is truth in both points of view, I don’t believe there is one generic best way of selling. Whether an auction or private sale will work best for you is dependent on a number of unique factors, including your home and your sales expectations.

This is not forgetting the property market itself. For example, in a highly competitive buyer’s market, auctions are best for properties that are in strong demand or that are hard to put a value on. Auction campaigns are also the best method for vendors seeking a result within a defined timeframe, as they typically mean a 30-day turnaround, culminating in a one-off auction event.

This fixed date, along with auctions’ pressure and emotional tension will motivate buyers to act quickly. These buyers’ psyche is different to those of private sale purchasers too.

Once they know the property’s price guide, auction buyers will often start thinking how much more they’re prepared to pay to own it. The competitive nature of auctions also means buyers think emotionally, rather than objectively, especially if they’ve already fallen in love with the property. This often results in a much higher sales price for the vendor.

In addition, unlike private sales, auction purchases have no cooling-off period with the buyer required to pay a deposit and sign a contract immediately after the event. This gives buyers the chance to own a property faster, without prolonged negotiations.

But auctions are usually more stressful for vendors than private sales. Campaigns only run for three to four weeks and end in a tension-filled event where you might have to make some swift and significant decisions.

For a start, you’ll need to decide on your property’s reserve price beforehand. Your agent can help you decide on the best figure, based on market feedback. But this price is important as your auction won’t be successful unless bids reach this amount.

If they don’t, you’ll have to decide whether to modify the reserve at the auction or to pass in the property. If you choose to do the latter, you and your agent will negotiate with the highest bidder in private to reach an acceptable price, just as you would in a private sale.

Both situations can be tense for vendors, who may already not be comfortable with auctions being so public. As a result, private sales might be a more popular method as they enable vendors to keep their sale price private. And, even though negotiations might take longer, private sales allows vendors more time to consider competing offers from buyers.

Often, buyers who purchase via private sales can typically be more cautious than comparable auction buyers. They know vendors include a negotiation buffer on their preferred value so their sales offers will be lower, rather than higher, than the price guide.

With both auctions and private sales having good and bad points to consider, the smartest thing you can do is consult with your agent. Ask them why they have recommended an auction or private sale, and discuss any concerns you have with these options. Remember a good agent is there to support you through the process and guide you as to current market conditions.