Sale by Private Treaty
Tansactions set to be ‘revolutionised’ through private treaty auctions
As a result, sellers naturally need to know that the agent and company marketing his/her home is committed to achieving the best possible market value through dedicated marketing and a focused negotiation process.
At present, the high number of bank repossessed or ‘distressed’ homes being put on auction — including mass auctions and ‘no reserve’ auctions — has created the public perception that these are bargains to be had at knock-down prices. This has a negative ripple effect on the perception of property values in the market place in general.
Now more than ever there is a stigma attached to selling a property on auction as opposed to via the conventional, private treaty method through a real estate agent. Due to the current economic situation and distressed sales, buyers are expecting a big discount on auction. It’s essentially an all or nothing scenario, and if the auction does not achieve a successful sale then you’ve put all your eggs in one basket and have no room to now try to negotiate a better price.
At an auction there’s really no pressure on buyers who are bidding at their own comfort level, and it’s also very likely that only a portion of those who would be interested in that property are actually bidding for it at that particular time. In terms of a private treaty the agent is able to present the property and its key attractions and benefits to all potential buyers over a period of time — thereby tapping into a much broader market — and creating a platform of competition between interested buyers. Through a negotiation process he or she is then able to bring to the table the best deal for the seller. A dedicated and skilled agent takes the time and trouble to point out to interested buyers – on an individual basis – the potential and opportunities presented by the property. An agent may also be able to swing an interested buyer over from another area which is very similar but which the buyer has not considered. It’s this kind of market research, understanding of the marketplace and specialised area information that differentiates this method of selling from auctions.
While generally an auction indicates a sale in haste as in the instance of distressed sellers, there are instances where special, landmark or iconic properties — usually of a commercial nature — have indeed achieved what appear to be unexpectedly high prices, but this is by far the exception. The traditional method of sale by private treaty, in the hands of a reputable agency and skilled agent, remains generally the best method and is usually favoured by sellers. Many sellers and purchasers wanting to take their time, do their homework and either sell their home or source their ideal home for the medium to long term future, would not consider auctions as their method of transacting.
In order to purchase at an auction one requires an unconditional buyer who has a 20 percent cash deposit – 10 percent cash deposit in trust to secure the sale and 10 percent agent’s commission. Therefore auctions attract unemotional cash buyers who are bargain hunters sourcing properties being sold under ‘fire sale’ conditions. In the current market there is the possibility of too low a price being established on the day of the auction, or even no bidders — which demeans the value of the property making it very difficult to return to sale via private treaty or the conventional method.
Do you want to know more or wish us to sell your asset by Private Treaty then
Call us now on 021 556 0328 or 072 293 1140