Auction VS Private Treaty
Agents across the country have long debated the best method of sale – is it via Auction, or via Private Treaty? Which gets the best result for the vendor, the buyer, or the Agency? Sold Magazine asked some leading agents across the nation to give their opinion on what works best for them.
Rod White – Chief Operations Officer for Yong International – Auction
Every Auctioneer would have stories of properties selling far above both the vendors and the ‘experts’ opinion. Value, like beauty, is often very much in the eye of the beholder.
It is true that sometimes they do not reach the reserve and end up selling for less. But who can say that the final selling price was not the true price anyway? I have yet to have a valuer tell me that the price was too low.
In a changing market how can any agent confidently predict what will be the best selling price for any property? In a rising market, we often hear stories of buyers paying over the listed price. This happens when there are other parties interested in buying the same property. Imagine if it were a true Auction, what could be achieved!
If it’s a falling market putting the property on the market at too high a price (as most vendors want to do) can cause those vendors to eventually sell for a much lower price than they could have originally achieved, simply because the property value has fallen during the period it has been on the market.
By removing the price, it enables the buyer and seller to meet at an agreed price. Provided that both parties are not under undue pressure and both know the market conditions, then this should be the real value of the property.
Auctions also remove the habit of some agents to ‘Buy the listing’ in other words quote a higher likely selling price than what is a realistic price, simply to get the listing.
What about the marketing cost? This is a common complaint. In reality, the marketing program that is required to sell an Auction property should be no different to that of the marketing program required for any property. The only additional cost should be that of the Auctioneer.
I have witnessed an agent who decried Auctions as a sales method, actually conduct an Auction campaign. It was a total failure. He then used this example as proof that Auctions don’t work. There’s little doubt that the agents attitude would have been the main contributor to the failure of this Auction campaign.
Chris Gilmour – All Properties Group, QLD Private Treaty
I have been selling real estate now for three and a half years, and in my career I have only ever put two properties through an Auction campaign, and both times the properties were passed in.
People often ask me what is the best way to sell a property, some will say Auction produces the best and quickest sale for a vendor – well sometimes I find that hard to believe! I do believe Auction is the best method if you have a number of buyers wanting a property or in a booming market, but when the market tightens or enquiry is low I believe private treaty is the best outcome. My stats for selling properties stand at 91% list-to-sell, and with an average of 18 days on market, so for my vendors I believe this is the best method of sale.
In most cases during a marketing campaign I produce multiple offers, and I feel this way is better as each buyer doesn’t know what the other buyer is offering, and it drives prices through the roof and beyond my vendors expectations. At Auction the buyers compete against each other but can get away with only bidder $1 more to secure the property.
Agents say well you don’t know the Auction process or Auction will work in any area? This again I find hard to take. My area I’m up against one of the number one franchise groups in the area – and they Auction everything. The current clearance rate is 11% in surrounding suburbs, yet not one property in my area has sold under Auction conditions in over four years. I have an 86% market share in my area and all done by private treaty, most being sold in 18 days or less with multiple offers.
So the battle of Auction versus private treaty is always a heated battle, but with 150 properties sold last year by myself not one was Auction!