Professionals Real Estate 
Auction or private treaty? It’s a question you have to face when you sell your home. Check out what you need to know to make the right decision.
When you sell your home in Australia, you have two main options: sell by private treaty or sell at auction.
Both strategies have pros and cons, so understanding how they work is key to determining which choice is right for you.
Selling your Home at Auction
An auction is a public sale in which potential buyers bid against each other, and the highest bid wins. As the vendor, you set a minimum price. You can ‘pass in’ if your price is not met, then negotiate with interested buyers to see if you can finalise the sale on the day.
Auctions are highly regulated in Australia to protect all parties from false bidders and time wasters.
Advantages of Selling at Auction
- Competitive bidding: The competitive nature of auctions can help raise the price above the amount you might receive with a private treaty sale.
- Set timeline: Auctions come with a set timeline, usually something like a few weeks. This can help to make the sale experience quicker and do away with prolonged waits for the right buyer. You will also be working towards a clear sell date and be spared the disruption of constant open homes.
- No cooling-off period: Auctions do not have a cooling-off period in most states. Once the hammer falls, the sale is final, and the seller has to hand over their deposit.
- Market value: Auctions can effectively determine a property’s market value, as the price is set by what buyers are willing to pay on the day.
- Competition: The thought of bidding against others at auction may prompt a buyer to put in a high early offer above the reserve you have in mind. This can fast-track your sale.
Disadvantages of Auction
- Costs: Costs like auctioneer fees and marketing can add up if the property is passed in multiple times.
- Uncertainty: There’s no guarantee your property will sell on auction day. If bidding does not reach your reserve price, you may need to negotiate with the highest bidder or relist the property.
- Stressful process: The auction process can be stressful for both sellers and buyers. With multiple people bidding, the stress can be quite intense. However, a great real estate agent + auctioneer team will manage the process and make it less difficult for you.
Selling by Private Treaty
A private treaty sale involves listing your property at a set price and negotiating directly with potential buyers. The process is slightly different; buyers submit offers when they are ready and you make the decision as the seller which offer to accept. There may be some back and forth about the settlement date, conditions of the sale and whether or not a cooling off period will be included in the contract.
This is the more common method of selling houses in Australia, but different areas have different trends. In higher-priced areas, for example, homes tend to sell more at auction.
Advantages of a Private Treaty Sale
- Timing: You may receive an offer and sell on the first home open day or even as part of a preview campaign.
- Control: You have a different level of control over the selling process, including the ability to accept or reject offers without the pressure of a looming auction date.
- Lower costs: Private treaty sales tend to incur fewer costs than auctions.
- Privacy: Private treaty sales are less public than auctions, so they offer more privacy when you are selling.
Disadvantages of a Private Treaty Sale
- Longer timeframe: Private treaty sales can take longer to finalise. There is no set timeline, which can be a disadvantage if you need a quick sale.
- Buyer caution: Potential buyers may be more hesitant and take longer to decide, leading to extended negotiations and potentially lower offers.
- Cooling-off period: In most states, private treaty sales include a cooling-off period during which your buyer can withdraw from the contract, adding an element of uncertainty.
How will you sell your home?
There is no right or wrong answer when it comes to choosing between a private treaty and an auction. Often, your agent will recommend an auction if you’re in a competitive market with high demand, while private treaty sales suit neighbourhoods where buyers may prefer negotiation and extended decision-making time. The decision is up to you, but listen to your agent’s advice; they will know what is working well for home sellers in your market.
