It's the great Australian dream to own property and have a piece of the country to call yours.
But behind the glitz and glamour can be an arduous and stressful experience that is often overlooked. Putting together a budget, getting a mortgage preapproved and heading out into the market is one thing, but the private treaty process is another altogether. Most residential properties in Australia are sold this way, but it's not always the preferred method for buyers, and this could have a significant impact on the final selling price.
Here's all you need to know, and how to find a better way for a better outcome.
What is private treaty?
Whether you are an Agent, Buyer or Seller, it's important to understand the process around the negotiation and settling of a property. The method chosen and the way it is undertaken can make a big difference on the result.
Under a private treaty, the current owner sets the price they would like to get for their property at what they consider to be fair market value, usually with the help of a real estate agent. The agent reaches out and negotiates back and forth with prospective buyers on behalf of the owner to get the best price and close the deal.
So, what's the problem?
The concern with this is that there's absolutely no transparency on the offers made and who is actually making them, which causes a lot of frustration for all parties involved. By keeping everyone in the dark, it casts doubt and suspicion on the agent, and the process becomes both complicated and forced.
According to Malcolm Gunning, President of the Real Estate Institute of New South Wales, "some agents try and create competition by having buyers bid up on themselves, but REINSW does not condone this at all."
Put yourself in a buyer's shoes
Consider this typical scenario. You are ready to buy a house or an apartment, and you've been looking for weeks now, doing your research. This is when you stumble upon your dream property. It's perfect and it ticks all the boxes.
The agent tells you that you can make an offer, providing you with only vague guidelines of where you should be bidding. Completely in the dark, you sign the documents and submit your offer, trying to guess the thin difference between offering enough to win the negotiation, but not too much to avoid overpaying.
The problem is, you have no idea if you guessed right, and the agent doesn't tell you. Often, you don't hear anything back, or you're told to lift your offer, which leaves you in the same position as you were at the start: guessing.
If you win, you don't know how much extra you paid, and if you lose, you lost your ideal property, without having the opportunity to offer more.
This means that real market value is not achieved and the buyers leave unsatisfied. Additionally, the seller may not have found the best result if competition were encouraged.
What's a better way?
By allowing the seller and all potential buyers to see everyone's price and setting a time limit, a fair and final result can be achieved by encouraging healthy competition.
This way, the seller can personally see the process unfold to reach true value, the buyers can bid confidently without missing an opportunity, and the agent acts as a facilitator, championing the exchange.
Openn is a revolutionary new way that combines the best aspects of private treaty, auction, expression of interest and end date sale into one fair and open process. By using the Openn app, approved buyers compete for the property from the comfort of their own homes, while the seller watches on in theirs.
This ground-breaking technology makes the process exciting, enjoyable and rewarding for all parties, and doesn't leave anyone frustrated in the dark.