Last Updated: 26th June, 2024
What Is A Private Treaty Sale?
A private treaty sale is a common method of residential property transaction. In this process, the seller determines the price for which they wish to sell their property, and their real-estate agent negotiates with potential buyers to secure a sale close to this price. Both the buyer and the seller have the freedom to negotiate until mutually agreeable terms are reached.How Does A Private Treaty Sale Process Work?
- With a private treaty, the seller or vendor first sets a price range for the property when they list it for sale on the market.
- The marketing for sale begins. This may include dressing up the property for pictures, paying for paid listings on real-estate websites and newspapers, and arranging open houses for inspection by potential buyers.
- Prospective buyers are then free to make their offers through the real-estate agent or directly to the owner and negotiate on the price and terms of the sale, common requests from buyers include a subject-to-finance clause and a building inspection clause.
- Sellers are free to consider offers from as many prospective buyers as they wish, and keep the property on the market for as long as they want, unlike at auctions, which have a set date.
- Once the owner accepts an offer, a contract of sale is written, signed and exchanged.
- Next, a deposit will need to be made, after which the cooling-off period begins. During the cooling-off period, a purchaser can choose to withdraw from the contract for any reason. In New South Wales, this period usually is five days.
- Most buyers do a final inspection prior to settlement to ensure that everything is in order and in line with the contract of sale. The settlement is finalised.
- Learn to negotiate: The asking price is to be used as a guide for how much the owner is willing to accept for a property. The asking price is almost always higher than the price they’re willing to accept. That is to say, it’s negotiable. You should almost always offer less than what you’re prepared to pay. However, please be careful not to go too low, as you risk getting declined. Never reveal the maximum amount you’re willing to pay straight away. Instead, work your way up incrementally with the vendor.
- Research and then research some more: You can never be certain you’re paying a fair market price unless you’ve done your research. This can be as simple as looking at recent sales of comparable properties in the area. You can learn more about how to value property here. Also, finding out why the vendor is selling can help tremendously in your negotiations. Talking to neighbours after the open home can give you great insights into the property and the area.
- Set your terms and conditions: When you submit an offer, you have a chance to include conditions for the sale. For example, it could be a subject-to-finance clause, or it could be that the owner needs to fix a certain part of the home. Getting these in writing is vital, to avoid problems on the settlement date. However, be aware that vendors do not like too many conditions and may even reject offers due to them. Tip: Some vendors are looking for a quick sale. That is to say, in addition to a good price, a quicker settlement date could also be a deciding factor for vendors.
- Don’t get too emotional: While private treaties aren’t as emotionally charged as auctions, homebuyers still tend to get emotionally invested in homes they like. This makes it difficult to negotiate a fair price for the property. Leaving your emotion out of things will help you better negotiate with the agent and potentially avoid going over budget. Being prepared to walk away gives you better leverage.
- Do your due diligence: Researching the area and the property, taking care of the legal side of things, and ordering a building and pest inspections are all part of doing your due diligence. Doing your research on the area and the property using recent, comparable sales will help you decide how much you should offer. It can help you understand whether the property is fairly priced or overpriced. They’re almost never underpriced.
