A Guide to the Best Methods of Sale of Property in Sydney & NSW Real Estate

Private Treaty Sale

Let's start with the most common method of sale in residential real estate - Private Treaty.

Private Treaty Sale

What is a Private Treaty Sale?

A Private Treaty is a method of sale where the vendor sets a price for the property, and potential buyers negotiate with the vendor or their agent to purchase the property. This method is popular because it allows the vendor to set a price they're comfortable with. This allows potential buyers to negotiate and secure a deal.

Private Treaty sales can take anywhere from a few days to a few months, depending on the level of interest in the property. When a potential buyer makes an offer, the vendor can choose to accept, reject, or counter-offer. If the vendor accepts the offer, the property is sold, and the sale process moves forward.

One thing to keep in mind with Private Treaty sales is that the vendor can change the asking price at any time. So, if you're interested in a property, it's important to act quickly and make an offer you're comfortable with.

Pros and Cons of a Private Treaty sale

The biggest benefit of Private Treaty sales is that there’s Less pressure - offers can be considered at the vendor’s leisure, and there isn’t the fast-paced nature of an auction to contend with. With greater flexibility for negotiation, sellers can determine the pace of the sale process.

Buyers may also feel more comfortable knowing there is a cooling-off period (if available). For this reason, many purchasers prefer the private treaty sales process.

The drawback of a Private Treaty sale is that it’s hard to implement for unique and/or difficult-to-value properties. It’s mainly used when there are lots of comparable sales, making value easy to determine through the comparative market analysis.

You can check out our video on How to Sell a House to learn more about how the appraisal and CMA processes work.

What does Sold by Private Treaty mean?

When a property sells by Private Treaty, it is followed by the 5 business day cooling off period unless a section 66W Certificate is involved. If a buyer were to pull out during the cooling off period, they would only forfeit their 0.25% holding deposit.

Section 66W Certificate

What is a Section 66W Certificate?

What is a 66W certificate? This is a certificate that is included in the contract. If both parties agree to sign this, the cooling off period is waived. This means the property will be sold unconditionally off the bat and enter straight into the Settlement period instead, just like an auction would.

Auction

The other most common method of sale in residential real estate is Auction.

How do Auctions work?

How do Auctions Work?

What is Auction? An auction is a public sale where the property is sold to the highest bidder. Auctions are popular because they create a sense of urgency and competition among potential buyers. This can lead to a higher sale price for the vendor.

However, auctions can also be risky for buyers because they need to be prepared to bid quickly and potentially pay more than they initially expected.

Auctions are a necessary evil, however, as they are used for unique properties, don’t have comparable sales, and are thus extremely hard to value. Where Private Treaty serves to sell properties at their estimated value, at auction, it’s the opposite. The result determines the value. How does that work, you might ask? As we've said many times before: A property's value can only be determined by what a buyer is willing to pay for it. At Auction, we see this in real-time on Auction day.

If you're interested in buying a property at auction, it's important to do your research beforehand. Make sure you understand the auction process and set a budget you're comfortable with. It's also a good idea to attend a few auctions before you start bidding to get a sense of how they work.

Pros and Cons of Auction

The benefits of Auction is that they eliminate long negotiation periods and ultimately reduce days on market. Immediate exchange of contracts takes place. It’s competitive, though – the pressure is on buyers to make a good pre-auction offer.

Intensive promotional campaigns attract the maximum number of buyers in a shorter time. Shorter selling periods mean auctions can be more convenient with less disruption to the family.

Pass In Meaning

What does passed in at Auction mean?

A question we often see is “What does passed in at Auction mean?”. Before the Auction, the auctioneer and vendor will set a reserve price.

Auction Reserve Price

What is a reserve price at Auction?

What is an Auction reserve price? This is the minimum price the vendor will accept for the property. The property will be passed in if the highest bid does not meet the reserve price. In essence, this means the property didn’t sell at Auction.

The property cannot be sold below the reserve price without the approval of the vendor. If a property is passed in at Auction, it automatically rolls into a private treaty sale. Vendors will be happy to know there is no extra cost for this.

How do I find out the reserve price at Auction?

A common question buyers ask is “How do I find out the reserve price at Auction?”. The short answer is: Unfortunately, you don’t. That would very much defeat the purpose of an auction in any case. Even eBay auctions don’t work like that.

Off Market Property

Off market is a method that is sometimes used either as a presale strategy, when on a tight budget, or if the vendor wishes to sell their property discreetly.

What does off market mean in Real Estate?

What does off market mean in real estate?

So what does off market mean? An Off Market Property refers to a property that is for sale but not actively advertised to the general public. Off market sales are usually conducted through a network of agents and potential buyers. This means they rely solely upon the agent’s existing database of buyers.

Pros and Cons of Off Market

Off-market sales can be a good option for buyers looking for a unique or hard-to-find property. However, because these sales are not publicly advertised, it can be difficult to find off-market properties. You may need to work with a real estate agent with access to these sales types.

On the selling side, we usually don’t recommend this to vendors as the primary strategy. The chances of selling in a timely manner are far lower, as are the odds of getting a reasonable price.

People love to poke fun at agents for using the cliché, “You can’t sell a secret”. Well, to put this into perspective with a case study, we personally have had an off market sale that took over two years to sell! It most likely would have been sold within months had it been taken to market and for more. It sold in a very different market to what it started in.

If you’re considering off market as your main strategy due to costs, advertising fees can often run you less than a few grand, depending on the area. Plus, with the emergence of pay later options for sales, it’s now easier than ever to get listed for no money down. Yes, we can do this.

If you want to know more about the costs of selling a house, check out our video on How much does it cost to sell a House?

What is EOI?

EOI is another method of sale. But what does EOI mean?

EOI meaning

EOI Meaning

What does EOI stand for? EOI Stands for Expression of Interest. So what is EOI? This is where potential buyers are invited to submit a written offer on a property by a specified deadline. They're essentially expressing interest in the property. This method is commonly used when the property is unique or special and it's hard to determine its market value, similar to an Auction.

The vendor usually sets a deadline for the submission of offers, and after the deadline, they will review the offers and decide which one to accept. EOI is a less common method of sale in residential real estate, but it can be effective in the right circumstances.

Benefits of EOI

The benefit of EOI is there’s no publicly listed price. Serious buyers may make offers higher than expected and agreements can be reached before EOI closes. If no acceptable offers are received, the property could return the market as a private treaty sale.

Buyers can make a conditional offer, subject to a building approval certificate, settlement dates, finance, etc.

Real Estate Tender Process

Lastly, we have the tender method of sale.

What does tender mean in real estate?

What does Tender mean in Real Estate?

This is where potential buyers submit a written offer to purchase the property by a set date. This is similar to EOI but with a few key differences. The seller will then consider all offers and choose the one they deem most favourable.

The offers are presented in sealed envelopes, which are kept secret from other buyers. Sellers are also not allowed to accept any offer before the pre-specified deadline has been reached. This makes the tender process like a closed, silent auction.

The process is confidential, so buyers don’t know what other offers have been submitted. This can lead to buyers submitting higher offers in hopes of securing the property.

Benefits of Tender

Similar to EOI, the benefit for sellers is that there is no listed selling price, and buyers can’t compare your home to others on the market. The sale price is usually kept secret, so complaints about an overpriced home are less likely. Though we never recommend trying to sell too far above market price. This is because buyers are savvier than ever, inspect many properties, and have a good idea of value. They can’t really be tricked!