Agent for Sale of Property by Private Treaty – Sole Selling Rights
Agreement between the owner and the agent who is appointed to find a purchaser for a certain property to be sold, detailing the agents duties and the owners obligation to accept the purchase, amongst other terms.
A private treaty (also known as a private sale) occurs when a property is
listed for sale with an asking price. Interested buyers make an offer to
the agent, who in-turn presents the offer to the seller.
The agent will negotiate individually with prospective buyers to achieve a
sale as close to the price as possible.
Unlike auctions or fixed date sales, private treaty sales usually do not
have a set date by which the property is to be sold.
Sole Selling Rights
This is an arrangement where a single agent is appointed to market a
property for sale. The agent will be entitled to a fee if there is any
disposal of the property while the agent’s agreement is in force,
regardless of who found the buyer or had negotiations with them.
Benefits of Appointing an Agent
A real estate agent may potentially help to facilitate a sale or purchase in
several ways, such as:
• giving the seller an idea of current market conditions
• advising the seller on when to sell their property, and at what
price
• facilitating any marketing/advertising of the property, such as
‘dressing’ the property for sale
• letting the seller know when an offer has been made and then
letting the prospective buyer know if the offer has been accepted.
Private Treaty
Sale by private treaty is the method employed by most estate agents.
Initially a marketing plan is prepared for the property which includes a
guide price and a discussion around marketing material (photography,
brochures and other marketing angles).
A guide price is an indicator of what a seller is willing to sell the property
for and is used to attract buyers and offers. If there is a lack of interest in
a property an agent will likely advise to reduce the guide price in an
effort to generate more interest.
Different types of properties require different methods to choose the
correct guide price, for example, a high-end luxury property that only a
handful of people may be interested in would typically be priced slightly
above the valuation level as only one serious buyer may be interested in
it. The higher guide price will give the agent more leverage while
negotiating with fewer interested parties.
A lower than expected guide price can help to stimulate interest and
encourage active bidding to often exceed expectations. Properties which
are priced too high can remain on the market too long and become
stagnant.
The estate agent will create the property listing on their website and
property portals and also circulate to any potential buyers who have
registered with them. The potential buyers may view the property and
submit an offer. Once an offer is received the agent will update other
interested parties to see if they would like to place an offer.
After the marketing period the agent will advise the property seller on
bids received and generally aim to select the top bidder or the one that is
most likely to close the sale. The agent may also advise to complete the
bidding process by way of ‘best & final bids’ thus ensuring the seller
receives the optimum price and can make an informed decision as to the
best candidate. Best and final bids would request all interested parties to
submit their best and final offer by a certain date and time to include any
specific conditions and evidence of funding.
Once the seller accepts an offer the agent will request a booking deposit
from the buyer (this is fully refundable until contracts are signed), and
issue a sales advice note to the buyer, seller and both of their solicitors
outlining the terms of the sale. The solicitors then commence the
conveyancing process of the sale. It is the agent’s responsibility to
ensure the buyer completes a survey and bank valuation (if required) as
soon as possible. The property can then move to a status of ‘sale
agreed’.
Advantages of Selling a Property Through Private Treaty:
Opportunity for a quick sale
As soon as a private sale property goes on the market agents can start
to receive offers. Auction campaigns normally run for four to six weeks,
but a popular property being sold via private treaty/private sale, can sell
within a few days after hitting the market.
Greater flexibility
Allows more flexibility in determining the final price and negotiating with
each buyer. Agents with less time pressure may lean towards a private
sale.
Time to negotiate
As the agent you have more time to make a decision and negotiate the
price and terms and conditions of the sale. As there is less emotion
decisions can be made more thoughtfully.
More price certainty
Private treaty sale gives the agent greater control over the final price.
Unlike an auction which hands control to the market for the sale, a
private treaty/private sale campaign gives the agent more time to
consider whether they will accept, decline or negotiate an offer.
Buyers often prefer this method as they know how much the seller wants
Privacy
Offers the opportunity for private negotiation of the price between the
buyer and the agent, and enables the agent to withhold sensitive
information, such as the sale price, from the public.
Setting an asking price
The best way to set the asking price is in consultation with your real
estate agent.
Your agent would have presented you with a market appraisal figure
earlier in the campaign which is a good starting point. However, over the
duration of the sales campaign, markets can shift, and prices can
change.
Additionally, your agent has been hosting open homes and talking to
potential buyers about the property and gauging interest. They are best
equipped to help steer you on a suitable market led asking price.
Receiving offers and negotiating a sale price
Offers to buy your property will be presented in writing to your real estate
agent. Your agent will then discuss each offer with you to determine if
you want to decline, accept or negotiate.
The agent is a skilled negotiator and will continue to negotiate a price as
close to the sellers asking price as possible.
Finalising the sale
If an offer has been accepted, the final step is to legalise the sale.
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