When selling a property you have a number of options in relation to the method of sale;
In a private treaty sale, the seller appoints the estate Agent to market the property and to negotiate with prospective buyers to secure a sale. In Ireland, Private Treaty Sale is the most common form of sales method for residential property.
It is popular because:
a. It is cheaper for the seller than ‘Sale by Auction’ or ‘Sale by Tender’
b. It is more discrete and confidential than other methods because no one will know the actual sales price except the purchaser and the seller and of course their agents
c. It can take 12 weeks (or more) for the whole process to complete from the date of instruction to the date the sale is completed so this gives the seller time to get all their affairs in order including arranging to move. There are some disadvantages to the Private Treaty sales method and you should discuss these with your Estate Agents.
The main difference between the Public Auction method of sale and the Private Treaty method is that the Public Auction is held in public on a predetermined date at a specified place. This allows some weeks for an in depth and extensive marketing campaign to be carried out. On the appointed day potential or prospective buyers attend the auction room and bid on the property being offered for sale. The property is then sold to the highest bidder at the fall of the hammer. The seller will probably have an undisclosed reserve price on the property, which is a price below which he will not sell. There are a number of reasons why a seller would chose the Public Auction method of sale and these include:
a) Where the market is uncertain.
b) Where the seller themselves elect for this method of sale.
c) Where the property is unique and as a result, an accurate value is difficult to ascertain.
d) Where there are probate issues.
e) The property is at the top end of the market or is a ‘trophy house’. There are a number of advantages and disadvantages to the Public Auction method of sale and some of them can be considered an advantage or disadvantage depending on your point of view.
The advantages can be listed as follow:
1) Everything is conducted in an open transparent manner.
2) In the event of probate or the division of a property portfolio or estates, all parties concerned are assured that the sale was conducted openly and fairly.
3) The sale is quick, it all happens on the day of the auction with the sale going to the highest bidder.
4) The sale at the auction is not ‘subject to contract’ and the sale receipt constitutes a ‘Memorandum’ as set out in the Statute of Frauds Act.
The disadvantages are that it is an expensive method of sale because:
To maximize the impact of the marketing campaign, high quality brochures must be produced.
There is a requirement to hire a suitable venue. An in depth and comprehensive marketing campaign must be conducted to maximize the sale price potential. It is not always the best method of achieve the true potential sale price of a property. The seller’s solicitor, in conjunction with the Estate Agent must prepare the ‘Conditions for sale’ and the contracts.
With the tender method of sale prospective buyers are invited to submit their highest bids, by a predetermined date, in sealed envelopes along with a deposit cheque. The bids are then opened and the seller decides who they will sell their property to. They are under no obligation to sell to the highest bidder. They may decide not to sell at all. The Tender method of sale is normally used where the sale involves development land, commercial property or where there is an amount of uncertainty about the value of the property.
The disadvantages of the Tender method are:
1) The method is expensive because an in-depth and comprehensive marketing campaign must be conducted to maximise the sale price potential. All of this must be paid whether the property is sold or not.
2) It will involve the preparation of documents that will form the basis of a legal contract, so the seller will have to instruct their solicitor in this regard. Both the solicitor and the Estate Agent at Hogan Estates will have to work closely in the preparation of these documents.
3) The Tender Method means that the prospective buyer will have to complete and submit a detailed ‘Tender Document’ along with a deposit cheque and this can be off-putting for some buyers.
The advantages of the Tender method of sale are:
1) It allows time for proper market penetration by conducting a comprehensive marketing campaign.
2) A bid that is accepted then forms part of a legal and binding contract.
3) It is a good sales method if the market is uncertain.
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