Private Treaty Sales: The Hidden Benefits For Buyers and Sellers

June 7, 2022

News Image

The recent rise in interest rates, the general feeling of uncertainty caused by the election, the increasing cost of living and rise in inflation, and the general lack of confidence in the economy have all contrived to shake the property market over the past few weeks. Add to that a dip in the auction clearance rate from the beginning of the year and this week's surprising leap of 0.5% by the RBA and it is clear that:

Property prices are falling!

The auction clearance rate for the week ending June 5th was a firm indicator that the heat is starting to leave the market. When you consider that a good clearance rate is 70-75% and the figures released by Core Logic for that week were Sydney (59%), Melbourne (61.2%) and Brisbane (65.3), it is obvious that the RBA’s decisions are already having an impact.

Though these results may be music to the ears of buyers, how they affect the decisions of sellers is not so clear. Many sellers may not even know, for example, that there is another way to sell their home or what the process involves.

Fortunately, Listing Loop are experts when it comes to private treaty sales

It's fair to say that in highly competitive, inflated markets, (or if a property is unique, for example), auctions have their place, however, in less predictable and favourable climates like the one we are entering into - when more people choose to sell off-market, for obvious reasons - private treaty sales are a better option, especially for those who aren’t in any rush or don’t want to enter the pressure chamber of an auction.

A private treaty sale offers both parties more control over the sales process

From the buyer’s perspective, the biggest benefit of a private treaty sale is the cooling-off period, the extra 5-7 days they get before they must commit to the purchase. For sellers, it is the luxury of more time to negotiate with their buyers, which may also drive the price up.

Understandably, buying a property under auction conditions is not for the fainthearted: buyers must be aware that there is no going back once the hammer has fallen, and sellers must be prepared to make life-changing decisions on the spot.

What is a private treaty sale?
A private treaty sale offers both buyers and sellers more control over the sales process

So, what is a private treaty sale?

In brief, it works the following way:

The seller and their agent agree on a sale price at which to market the property, and when offers from buyers start to come in, the seller has time to consider them. They may accept or reject them or negotiate with their buyers.

Once the parties agree on a price, contract conditions are undertaken, contracts are signed with a small deposit and the parties enter a cooling-off period - between 5-7 days, although this varies in terms of length of time and fee on the state.

When they reach the end of this period, contracts are exchanged and the sale is legally binding. Usually, settlement follows six weeks later.

The obvious benefit of a private treaty sale is less stress, but what are the other, hidden benefits?

  1. The final sale price of the property is unlikely to veer too far from the original sale price which is good for sellers in terms of planning and good for buyers in terms of budgeting.
  2. Both parties have more control over the sales process and more time to consider their options during negotiations.
  3. There are fewer unknowns. No one can predict what exactly will happen on auction day, whereas the process is more methodical with a private treaty sale.
  4. The marketing costs are less than for an auction campaign, so long as the property doesn’t remain on the market for too long.
  5. Both parties have the benefit of greater privacy. They can negotiate privately and choose whether to disclose the sale price.
  6. There is less pressure overall. Emotions may still run high during this sales process, but a private treaty campaign is less rigorous than an auction campaign and negotiations and difficult decisions can be made in private and both parties can feel confident that the price is unlikely to escalate or drop much beyond the original sale price.

Ultimately, you will work out which sales method suits your personality and situation best. However, if you decide to sell your property off-market with us or via private treaty and you need more information about the many benefits of this sales method, speak to your agent or check out our Seller Assist service, where we set you up with one who suits your requirements.

Alternatively, if you are looking to buy a property and find the private treaty method more appealing, check out our off-market listings on this site or download the Listing Loop app for our latest updates.

Not yet a member? No worries, sign up here today for free.


The latest listings direct to your inbox

Discover pre-market and off-market properties you didn’t know were for sale. Listing