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Auction vs. private treaty: which one is right for you

April 28, 2011

In Australia, private treaty still proliferates with only around 15 percent of property sales the result of the auction process. Benefits of selling at auction: it puts a time frame on the sale.

“Traditionally, and it does fluctuate depending on the market, properties that go to auction are normally in the market for a lot less time,” says Graham Hennessy of Premier Property Auctions.

“Statistically, auction properties are sold in around 60 per cent of the time it takes to sell by private treaty. So the certainty of a sale from a seller’s point of view is a lot greater,” he adds.

Disadvantage of auction
Sellers are responsible for the advertising and marketing costs.

“These costs vary enormously depending on your location and where you advertise. Some agents will take it out of their commission but most have it as an added cost,” Grahams says.

Which properties are sold by auction?

Auctions are very popular in the more mobile markets such as those where you have third, fourth and fifth home buyers.
Traditionally with first home buyers, and vendors in many country areas are more likely to sell by private treaty.
Very few new dwellings go to auction.
In specific areas such as Sydney’s Eastern suburbs and North Shore, the auction market is by volume, around 80percent of all transactions

Graham adds however that the auction process make up a larger proportion of the market than is reported. “The figures you see in the real estate sections only tell you what sold under the hammer on the day. It doesn’t tell you what sold as a result of the auction process prior to auction. Many people put their property on the auction market but accept an offer before the auction date. Those sales don’t get reported as auction sales even though the auction process was responsible for the result.”

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