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House Auction or Private Treaty Sale? Why not both?

Sam Kinloch

We often speak to sellers who are unsure of the right way to sell and market their property. They are keen to establish whether a private treaty sale or an auction sale is right for them. 

Our advice? The best way to list a property for sale very much depends on the nature of the building, your personal circumstances, the property location, and the buyer demographic most likely to be interested in making an offer. So, while there is no one-size-fits-all answer, there are fundamental differences to be aware of.

In fact, we find that it’s sometimes not a case of either or - you can actually use both an auction house and a local estate agent to work together with the common goal of selling your house quickly and efficiently.

Auction houses and Estate agents can be ‘joint agents’ providing numerous benefits when it comes to buying or selling properties.

By combining the expertise and resources of both professionals, sellers or buyers can maximise their chances of success. In fact, we work with 650 joint agents across the South of England to help their buyers and sellers achieve the best possible price for their property.

In this guide, the Clive Emson Auctioneer team explains everything you need to know, including the comparables regarding certainty, speed and pricing. We also review how both parties can work together to achieve the best possible outcome for your property sale.

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.

House Auction or Private Treaty Sale? Why not both?

We found that there are 5 key differences to consider when comparing auction sales and private treaty sales through a local estate agent:


  1. The average time frame for a sale
  2. Pricing structure and set-up
  3. Buyer offers and bids
  4. Marketing a property
  5. Certainty of the sale

Difference one: Average Time Frames When Selling a Home at Auction vs Private Treaty

Auctions

One of the advantages of an auction sale is that the process is fast. Provided the property receives a bid at or above the reserve price, the transaction must be completed in as little as 20 days.

Related reading: How long does it take to sell at auction. 

The normal payment process works like this:

  • When the auction finishes, the buyer pays a 10% deposit immediately – this can vary for lower-value lots or be a fixed amount which will be stated in the terms of sale.
  • The buyer then remits the balance within 20 working days, which is why many auction buyers are cash buyers, although some will have pre-agreed mortgage financing.
  • At the point of exchange the auctioneer will send the auction contract to both the buyer and the seller's solicitor who will arrange for completion to take place within the allotted time frame.
The auctioneer and the seller's solicitor assist with most of the practicalities, such as compiling the legal pack, including the title deeds and search documentation, to ensure the seller is ready to proceed immediately.

Private Treaty

In comparison, private treaty sales can take far longer, but this varies depending on the interest in the property, how well the house is marketed, and whether other aspects are likely to cause delays, such as the buyer being part of a property chain.

When you contact your local estate agents, they may suggest that they work in conjunction with an auction house to be able to sell your property as quickly as possible should this be a requirement.

Difference two: Pricing Considerations for Listing a Property for Sale

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.

Difference three: Buyer Offers and Bids 

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.
 

Difference 4: Marketing a Property for Sale at Auction or Via Private Treaty Sale

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.
 

Difference 5: Certainty of Achieving a Successful Property Sale

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.
 

Summary: Differences in Selling a Property Via Private Sale and Auction


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. To recap, the table below outlines the key differences we have explored.



Private Treaty Property Sale

Auction Property Sale

Average Time Frame

Timings can vary considerably, with some properties selling quickly and others taking up to approximately six months to sell.

The successful bidder pays a deposit of 10% when the auction concludes, with the balance in 20 working days. Completion must occur within this time frame. 

Pricing

The seller decides on a listing price, often with help from their agent, who will negotiate offers which may be above or below the listing price.

The auctioneer assists the seller in setting a reserve and guide price. Properties will not sell for any less than the reserve, although they often achieve a greater value when the bidding is competitive.

Offer Process

Buyers can submit any offer they wish directly to the seller or through an agent – most buyers begin with offers at around 10% below the listing price.

Sellers can sit in on the auction and watch bids being placed. The highest final bid wins the auction, provided it is at or above the reserve price.

Marketing

Most private sales are primarily aimed at homebuyers and can be marketed online and throughout the local area.

Auction houses usually have engaged buyers looking for investment or development opportunities alongside enthusiasts interested in unique properties. 

Certainty

Selling property via private treaty sale can depend on the market, interest in the property and the listing price advertised. 

Around 70% to 80% of houses at auction sell on the day, with any unsold lots potentially re-listed in another auction or subject to post-auction offers.


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.
    Keep your chain intact: If your buyer has pulled out of your sale and you need to find another buyer asap to keep the property that you’ll be purchasing, an auction offers a great way to resolve this situation. 

  • 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.

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. 



About the Author

Sam Kinloch

Sam Kinloch

Director & Senior Auction Appraiser
MNAEA MNAVA

Sam’s career in the dizzy world of property auctions began when he hung up his chainsaw and headed in from the forest. Joining the team in 2003 Sam now sits on the Board of Directors and has been instrumental in the adoption of online auction services.
Out of the office you can find him flying around the velodrome or sipping coffee at a local café.


01273 504232

07968 780714

sam@cliveemson.co.uk

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