While auctions tend to grab the headlines, buying and selling property via a private treaty sale is actually more common – so what is it, and how does it work?
With a private treaty sale, vendors selling their home do not physically see buyers competing against each other on their front lawn like they would at an auction. However, this method is the preferred option for many thanks to it being a more intimate and less intrusive selling campaign where the buyer and seller negotiate in a much more private manner.
What we refer to as a private treaty sale occurs when a house or property is listed for sale with a fixed asking price or price range, and in turn a potential purchaser presents an offer to the vendor via an agent.
It’s up to the vendor to decide whether or not they want to accept the offer. Generally speaking, negotiations go back and forth between the vendor and the purchaser via the real estate agent, until a price is agreed upon. While the seller may have an ideal end date in mind, unlike an auction, there is usually no deadline to sell the house. The property can be on the market for as long as it takes to get the vendor’s desired price.
A Step By Step Guide To A Private Treaty Sale
Although the process sounds relatively straightforward – there are still a few key events that happen with just about every private treaty sale. By following the below process, both the vendors and potential buyers have a better idea as to what to expect, and when.
Setting The Price – Although the price is ultimately set by the seller, an ideal range will be determined by looking at recent comparable sales and a recommendation from your real estate agent or property advisor. Their role is crucial here, as they can help you understand market conditions, when is the best time to sell, and how to decide on the final price. It is normal for the purchaser and homeowner to negotiate back and forth when selling through a private treaty sale.
Marketing Plan – Once you’ve settled on your ideal sale price or range, the initial marketing starts. You want to showcase your home in the best possible light to appeal to a broad range of potential buyers, so consider professional property styling to ensure you do your home justice. The marketing plan for the sale of your home should be considered an investment in attracting as many buyers to your home as possible to maximise the sale price.
Receive Offers – Once your property has been launched online and you’ve had potential buyers come and physically inspect your home, ideally it’s only a matter of time before you start receiving offers to purchase the property. If a buyer wishes to make a formal offer, it will go via your real estate agent. It’s then the agent’s job to present the offer to the vendor with the required documentation, and advise accordingly.
Expect Negotiations – As a general rule, there usually will be a round of back and forth communication between purchaser and seller via the real estate agent. If the offer is relatively close to the ideal sale price for the vendor, this helps to speed things up in order to settle on the final price. It is the agent’s role to negotiate not only the highest price but also to try and get terms and settlement dates that are favourable to the owner.
Conditions & Inspections – It’s only natural for the buyer to have as much information about their potential new home as they can, which is why vendors can expect requests to conduct things like building and pest inspections. These inspections usually happen as a part of a contract of sale when a vendor accepts an offer, but the outcomes of the inspections can also be a condition of sale that allows the buyer an out if they aren’t fully happy.
Contract Is Finalised – Legal representation is recommended to act on your behalf to finalise the contract and settlement. Once all the terms and special conditions on the contract have been satisfied the contract will be deemed unconditional and the full deposit paid. Once your legal representative has confirmed an unconditional sale you are sold and now working towards settlement day.
Settlement Day – The settlement date in the contract of sale would have been agreed to in the negotiations, and is when ownership passes from the vendor to the buyer. Most purchasers will conduct a pre-settlement inspection the week prior to the final settlement. If everything is in order and in line with the terms agreed in the contract of sale, settlement day will proceed and the balance owing on the property paid before the purchaser receives title and the keys to their new home.
As a buyer, it is essential to decide on your top offer, and getting pre-approval for a home loan is part of this step. This will give you a sense of how high you can go and what you can comfortably afford, or what is going to stretch you to the limit. The last thing you want as a buyer is to get emotionally attached to a property, only to have your finance fall through.
Deciding on your initial offer figure can be determined by a number of outside factors. If there is a lot of interest in the property – it may be worthwhile going at the top-end of your bracket to secure the property faster. A key factor to keep in mind is that if you go in with a low offer, you risk another party ‘knocking you out’ of the race with a higher offer.
As a seller, even if you’re listing in today’s very hot market place where demand is currently outstripping supply, it’s still important to be flexible when selling through a private treaty sale. Decide in advance on things you may be flexible about, such as inclusions or particular terms, and things that you are firm on, such as price.
Take The Stress Out Of Selling Property
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If you are an emergency services worker looking to potentially buy or sell property in the future, please get in touch with Emergency Services Property Advisors today to discuss how we can help, or call Luke directly on 0414 757 705.
