Auction or private treaty? How to choose when you sell

One of the first decisions a seller makes is how to sell. In Melbourne and Sydney auctions get most of the attention, while in Perth private treaty is far more common. Neither is right for every home. Here is how we talk it through with owners.

How each method works

At auction, buyers compete in public on a set date. If bidding reaches the seller's reserve price, the highest bidder buys the property on the spot, on an unconditional contract with no cooling-off period. If it does not, the property is passed in and the agent negotiates with the highest bidder afterwards.

With private treaty, the home is listed with an asking price or a price guide, and buyers make offers privately over weeks. The seller can accept, reject or counter each offer, and contracts often include conditions such as finance or a building inspection.

When auction tends to work well

• The home is in high demand, such as a well-presented family house in a popular school zone.
• It is hard to price, because there are few comparable sales.
• You want a firm date and an unconditional sale.
• Several buyers are likely to want it, so competition can push the price above expectations.

The trade-off is cost and pressure. Auctions usually come with a concentrated four-week marketing campaign, an auctioneer's fee and a very public result if the property does not sell.

When private treaty tends to work well

• The market is slower, or the buyer pool for your type of home is small.
• The property is unusual, such as acreage or a heritage cottage, and buyers need time to do their homework.
• Buyers will need finance or inspection conditions before they commit.
• You prefer a quieter process, without a public bidding day.

The downside is that a home can sit on the market longer, and a price set too high at the start can make buyers wary later.

Questions to ask yourself

Before you decide, think about three things. How quickly do you need to sell, and does a fixed date help or hurt you? How many buyers are realistically looking for a home like yours right now? And how comfortable are you with the possibility of a public pass-in?

What the data in your suburb says

Ask your agent for recent results for similar homes in your area: how many sold at auction, how many were passed in, and how long private treaty listings took to sell. Clearance rates are published weekly in the major cities and give a useful snapshot of buyer confidence.

You can change course

Many campaigns are more flexible than they first appear. A property listed for auction can sell beforehand if a strong offer arrives, and a private treaty listing can move to an auction or an expressions-of-interest process if demand turns out to be higher than expected.

Whatever you choose, the basics matter more than the method: good photography, an honest price guide, a home that is clean and repaired, and an agent who keeps you informed after every open.