There are generally three ways of selling a property. They are sale by private treaty, auction and tender. Most people use private treaty as the common way of selling their property. In private treaty, vendors negotiate separately with one or more interested parties after making known to them the terms of the offer through an advertisement placed in the local press or some other promotional material. Probably, 95% of all properties are sold by this method. Because it is “private”, only the buyer and vendor are privy to the negotiations. “Privacy” can be further enhanced by targeting only a select group of prospective buyers in the promotional campaign.
A prudent sales approach would imply that the vendor or his agent should put in writing the terms of the offer. Any correspondence between the vendor the prospective buyer, however, is usually made “subject to contract”. These words signify that both parties are negotiating terms, and it is therefore, not their intention that an enforceable contract be entered into until the signing of a formal agreement between the parties. This also means that either party can withdraw from the negotiations without penalty. Furthermore, any particulars describing the property sent by the agent to prospects normally include a statement that they “are not intended to form part of any contract”.
Private treaty has the salutary advantage of being flexible, since the parties are free to negotiate without final commitment. Indeed, the completion of the sale can be structured to the best advantage of the parties, for example, to coincide with the sale of the purchaser’s previous house, or the purchase of the seller’s new home. Furthermore, the owner need not commits to any doubtful prospect before the signing of the sales agreement, and is free to transact with a “better” prospect who could complete the deal in a shorter time or can offer a better price.
Private treaty is also relatively inexpensive and can be preceded by an efficient, very focused marketing campaign targeted at the likely purchasers of the property. However, vendors tend to be generally optimistic about the worth of their own property, and hence, asking prices set for a private treaty sale may often be higher than what is the market level. The agent ought therefore, to advise his client on a realistic price for his property based on his market knowledge and after gathering appropriate evidence of comparable sales. If necessary, he should consult a property valuer to provide the pricing input.