Auction vs Private Treaty. Is One Better Than the Other?

Auctions and private treaty are two common methods of selling real estate. Each has its own benefits and drawbacks, and the best method will depend on the specific property and market conditions.

Benefits of auction:

• Speed: Auctions are typically quicker than private treaty sales, as the property is sold on a specific date. This can be beneficial for sellers who want to sell their property quickly and move on.
• Certainty of sale: Auctions create a sense of urgency among buyers, as they know they have a limited time to bid on a property. This can lead to a higher degree of certainty that a property will sell, compared to private treaty sales where the process can drag on.
• Transparency: Auctions are conducted in public, which can provide transparency for both the seller and buyers. Buyers know the other bids being placed and can make an informed decision on the fair market value of the property.
• Setting the market price: Auctions can help to set the market price for a property by creating competition among buyers.
• Build interest: Auctions create buzz and interest among buyers, and can lead to higher turnouts than private treaty sales.

Benefits of private treaty:

• Flexibility: Private treaty sales offer more flexibility than auctions. The seller can set a price and negotiate with potential buyers, rather than having to sell at the highest bid price.
• A more relaxed process: Private treaty sales allow for more time for buyers to inspect a property, negotiate with the seller and secure financing, compared to the time-pressure of an auction.
• Better for unique properties: Private treaty sales can be a better option for properties that are unique or difficult to value. This is because the property can be marketed and priced according to its unique features and benefits, rather than being sold on the open market
• Marketing: Private treaty can be better to get more exposure and target a specific market segment with a tailored marketing strategy, rather than just auctioning the property to the highest bidder.

Ultimately, the choice between auction and private treaty will depend on a number of factors, including the type of property, the local market conditions, and the seller’s personal preferences. A real estate agent can provide guidance on which method would be best for a specific property, and can help to prepare and market the property accordingly.