If you’re planning to sell this spring, one of the decisions you’ll have to make in consultation with your agent is whether to sell via auction or private treaty.

Among real estate experts, there are strong advocates for both methods. Some say the competitive atmosphere of an auction guarantees the best price. Others warn that auctions are fraught with danger and a private treaty sale is the most effective way to wring every last dollar out of a buyer.

While there are merits to both points of view, I don’t believe there is one generic best way of selling. What will work best depends on a number of factors unique to both you and your property.

For example, if your property is unique in some way or otherwise hard to put a value on, you’re probably better advised to go to auction. If you need a quick sale, the fast turnaround of an auction campaign will be just the ticket. This fixed timetable also motivates buyers to act quickly and adds to the competitive environment.

However, if you’re just dipping your toe in the water to see if someone will make you an offer you can’t refuse, then private treaty is the way to go.

Current market conditions and the level of demand for your style of property are also important factors to be considered. If your property is in demand, it’s more than likely you’ll attract several buyers willing to compete at a similar price level, and that’s when the auction process really comes into its own.

Let’s talk about how these two methods of sale impact a buyer’s psyche.

In a private treaty sale, a buyer will ask, “What’s the price?” The agent tells them, say, “$650,000”. The buyer’s immediate thought is, “I wonder how much below that I can get it for”. Buyers know that vendors put a margin for negotiation in the asking price. So the buyer starts thinking, “I wonder how much negotiation room they’ve plugged in? Maybe I could get it for $620,000 or $600,000. Maybe they’ll take $580,000 if they’re desperate”.

In an auction sale, a buyer’s thought process is quite different. The agent will give them a price guide, but if they’ve fallen in love with the property, buyers will often start thinking how much more they’re prepared to pay to own the property. “The agent says, ‘Around $650,000’ – I wonder how much more I would have to pay to make it mine?” they will say.

Auctions are usually highly emotionally charged events and it can be hard for buyers to stay objective, particularly if they’ve fallen in love with your property. The competitive nature of auctions can also heighten buyers’ desire to ‘win’. When someone else wants what we want, we often want it twice as badly!

Now how about your psyche? Well, I can tell you that auctions are generally more stressful that private treaties because the whole selling program is condensed into a 30-day period culminating in a one-off auction event. You’ll need to make a decision on a reserve price and, if you don’t reach it on auction day, you’ll need to make a call as to whether to pass it in or modify the reserve while the buyers are outside waiting.

For some people, this stress is too much to bear. I’ve come across situations where the house was suited to auction but the vendor wasn’t. Some vendors are also uncomfortable with the public nature of auctions. They don’t want everyone knowing how much they received for their home. In these cases, private treaty provides that discretion and allows you much more time to consider offers from potential buyers.

The most important thing to do is talk to your agent. Ask them to explain why they’ve recommended a particular method of sale and be honest about your feelings. It’s part of an agent’s job to support you through the process so feel free to share your concerns.

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.