Sale by Private Treaty
Sale by Private Treaty is the name for the usual sales and purchase process described above.
There is no end date on the marketing campaign, offers can be made at any time and the normal Sale & Purchase Agreement documentation is used.
The Deadline Sale method is fundamentally the same as those of Auction and Tender except it allows maximum flexibility for you to accept what you like and when you like.
The property is offered for sale with no price with a deadline upon which offers need to be submitted (eg three to four weeks) on the basis that the vendors reserve the right to accept an offer at anytime before then.
This method will:
- Attract a high level of interest through the marketing programme.
- Create urgency as a result of a fixed time frame for offers to be made by.
- Provide the opportunity for a motivated buyer, prior to the deadline, to get in quickly and present you with a favourable offer prior to close of deadline.
- Invite interest on your terms without eliminating purchaser's variations.
- Ensure that interested parties will have little idea as to the level and extent of other interest.
- Not cap the price, therefore the risk of forfeiting a premium is averted.
- Allow you to be able to make decisions in your own time without pressure.
Buying property in an Auction situation – “under the hammer” means that you are an unconditional buyer immediately and will be immediately required to pay the agreed deposit (again, usually 10%).
Your contract will be the terms and conditions supplied in advance of the Auction itself and these are usually not negotiable.
Make sure you have viewed the property at an Open Home or by private viewing in advance of the auction itself. Have any property checks (including an independent valuation) done in advance if you are seriously interested in buying the property, as anything uncovered in a property inspection after the auction has ended is not grounds for breaking the contract.
Sometimes the agent marketing the property will have obtained some of the supporting information in advance for interested buyers, particularly the LIM report, which usually takes several weeks to obtain from the local council.
In New Zealand, Auction campaigns are most frequently used to market high-end or high value real estate, and should not be confused with Mortgagee Sale Auctions, where the holder of the mortgage on a property may require a quick sale and the buyers may be looking for a “bargain” purchase.
The sale by tender process is frequently used to sell commercial property, and for rural real estate including farms, but can also be used for residential property. The normal Tender process involves creating a set of Tender documents, which contain the terms and conditions of the sale (similar to an Auction).
The main difference between a Tender and an Auction is that the bidding process is private in a Tender.
Buyers put forward their best offer on the provided Tender documents, by the deadline required. The owner of the property (or their agent) may then negotiate with all buyers if the offers do not reach the level desired by the property owner. The owner has the right not to accept any offer, or to choose to accept an offer that may not necessarily be the highest.
If you are buying by Tender, you do have a chance to add some conditions of your own to the offer, which may help swing things in your favour if they are of sufficient value to the property owner.
Tender is perhaps best suited to property sellers and buyers who prefer details about the sale to remain confidential, but still wish to ensure they receive the best possible price in the market.
A Tender also gives all buyers the same opportunity to make an offer, at the same time, which is fair to all parties.