Options For Sale

Private Treaty

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:

• It is cheaper for the seller than “sale by auction” or “sale by tender”.
• It is more discrete and confidential than other methods — no one will know the actual sale price except the purchaser, the seller and their agents.
• It can take 12 weeks (or more) for the whole process to complete, from the date of instruction to completion — giving the seller time to arrange the move.

There are some disadvantages to the private treaty sales method, and you should discuss these with your estate agent.

Public Auction

The main difference between public auction and private treaty is that the 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. On the appointed day, prospective buyers attend the auction room and bid on the property; it is sold to the highest bidder at the fall of the hammer. The seller will probably have an undisclosed reserve price, below which they will not sell.

Reasons a seller might choose public auction:

• Where the market is uncertain.
• Where the seller elects for this method of sale.
• Where the property is unique and an accurate value is difficult to ascertain.
• Where there are probate issues.
• Where the property is at the top end of the market or is a “trophy house”.

The advantages:

• Everything is conducted in an open, transparent manner.
• In the event of probate or the division of a property portfolio, all parties are assured the sale was conducted openly and fairly.
• The sale is quick — it all happens on the day, with the property going to the highest bidder.
• The auction receipt constitutes a “Memorandum” as set out in the Statute of Frauds Act — there is no “subject to contract” stage.

The disadvantages: it is an expensive method because high-quality brochures must be produced, a suitable venue must be hired, and an in-depth marketing campaign is required. It is not always the best method of achieving the true potential sale price, and the seller’s solicitor, in conjunction with the estate agent, must prepare the conditions for sale and contracts in advance.

Tender

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 to — they are under no obligation to sell to the highest bidder, and may decide not to sell at all. The tender method is normally used where the sale involves development land, commercial property, or where there is some uncertainty about the value of the property.

The disadvantages of the tender method:

1. It is expensive — an in-depth marketing campaign must be conducted to maximise the sale price potential, and it must be paid whether or not the property is sold.
2. It involves the preparation of documents that form the basis of a legal contract, so the seller must instruct their solicitor.
3. Prospective buyers must complete and submit a detailed tender document along with a deposit cheque, which can be off-putting for some buyers.

The advantages of the tender method:

1. It allows time for proper market penetration through a comprehensive marketing campaign.
2. A bid that is accepted forms part of a legal and binding contract.
3. It is a good sales method if the market is uncertain.