House Auction or Private Treaty Sale? Why not both?

Private Treaty

Estate agents typically employ a comparative market analysis to determine the value of your property. They will assess various factors such as the property’s location, size, condition, recent sales of similar properties in the area, and current market trends.

Using this information, they provide a suggested asking price or a price range that they believe represents the current market value. The final decision on pricing usually rests with the property owner, but estate agents provide guidance based on their expertise and knowledge of the local market.

Auctions

Auctioneers focus on market analysis to provide an auction guide price for the purpose of marketing and reserve price which is the minimum agreed figure at which the property can be sold.

Like estate agents Auction houses typically conduct a comprehensive appraisal and evaluation of the property to determine its value. They consider factors such as its unique features, desirability, potential for bidding competition, and any existing market demand. The guide price is set based on these considerations, aiming to attract potential buyers while ensuring the property owner’s minimum expectations are met.

Selecting the right guide price for a property or choosing what reserve to place against an auction lot can be complex. In both scenarios, an experienced local property professional can help.

If the property is difficult to value, perhaps because it is unusual, has unique design features, or is a development project or high-value residence without any local sales to provide a comparison, an auction can be the best option.

That is because, in a private treaty sale, the price you achieve will be largely influenced by the listing price you set, whereas in an auction, many houses sell for substantially higher than the guide price.

The pace and intensity of bidding mean interested buyers keen to secure the purchase will continue to outbid one another until the auction ends.

Pricing and offers are perhaps the most notable difference between house auctions and private treaty sales:

Auctions

• Before marketing commences, the auctioneer recommend and agree a reserve and guide price with the seller. The reserve is the minimum figure the seller is willing to accept, and the guide price gives prospective bidders an indication of the value expected to achieve on the day.
• Sellers can watch the bidding process online – registered bidders can also see the most recent bid, when it was placed, and whether the reserve price has been hit.

Private Treaty

• On the other hand, an estate agent often advises the seller on a possible sale price in a private treaty sale. Alternatively, they may base this on a valuation that the agent or an approved local valuer provides.
• Estate agents often act on behalf of sellers conducting a private treaty sale. They will receive offers from buyers, and convey these to the seller to make a decision, often providing negotiation between the two parties.

Auctions offer price transparency, whereas private offers may be made as sealed bids or could even be undisclosed if the agent knows the price will not be acceptable to their client – they may advise buyers making very low offers of the minimum they anticipate the seller will be willing to consider.

Marketing can make a big difference to the price and interest your property achieves, and both agents and auctioneers will compile detailed listings with videos, photography, particulars and floor plans for potential buyers to review.

Property viewings for private treaty sales are typically conducted individually by the agent, with pre-agreement with the seller, although some sellers will show interested buyers around the property themselves.

In a property auction, most viewings are arranged as block bookings with a maximum visit time for each visitor and are often organised by the auctioneer on behalf of the seller.

Auctions

Auctions tend to offer greater certainty since around 70% to 80% of lots sell the first time they are listed within an online auction, which can be a considerable advantage if you need to sell as soon as possible or require a reasonable level of certainty to proceed with other plans, such as buying another property.

Once the auction is complete, contracts are exchanged and the sale must be completed within the allotted time frame or they will face sanctions.

Once a bid above the reserve has been placed, it is extremely rare for a buyer to try and withdraw from the contract of sale, and they will have committed to the transaction when making their confirmed bid.

Private Treaty

In comparison, every private treaty sale is different – some sales conclude swiftly, with an offer made at or above the listing price. Still, it can take up to six months on average, and some properties remain on the market for significantly longer without any guarantee that the home will sell quickly.

This is why a ‘joint agent’ agreement can be so beneficial to the seller. Estate agents and sellers can benefit from this certainty whilst gaining access to an established pool of buyers.

By now, you may be thinking: there is no ‘best’ way to sell a property and you’d be correct. Your choice very much depends on your circumstances.

Estate Agent and Auction House Partnerships

Although many sellers may assume they need to choose one option or the other, agents and auction houses commonly work together, providing several benefits for the seller.

Joint agents, also known as co-agents or dual agents, refer to a situation where two or more parties are appointed to market and sell a property collaboratively. In this arrangement, the property owner or seller agrees to work with multiple agents simultaneously, sharing the responsibilities and commissions associated with the sale. Joint agency agreements can be structured in various ways, but enable the seller to have the ‘best of both worlds.’

Agents may take a professional viewpoint that a property is ideal for an auction because of the types of buyers most likely to be interested in the lot or because the home is of a high value, and needs to be sold quickly due to the circumstances. The advantage to you as the seller are as follows:

• Maintain your relationship: You can continue to work with your local estate agent if you’ve built a great relationship with them.
• No extra fees: Working with an auction house as well as an estate agent would be of no extra cost to you. Read more about auction seller fees.
• A faster sale: An agent and auctioneer combination can complete the sale faster and with greater certainty whilst representing your best interests. Selecting a reputable auction house can achieve the outcome every party hopes for – a successful sale with an exchange on the day and completion in a short time frame.

You can find out more about how house auctions work here. 

For more information about selling a property at auction or working with Clive Emson Auctioneers, please get in touch at your convenience. We’re more than happy to work with Estate agents in a joint agent agreement. If you’re looking to sell a property via auction, get a free appraisal here.