Private Treaty Sales : her is a Simple Guide
When it comes to buying or selling a property in the UK, you will likely encounter several different methods of sale. While auctions and tenders grab headlines, the most common and familiar method is the private treaty sale. This guide breaks down exactly what a private treaty sale involves, how the process works from start to finish, and explores the key advantages and disadvantages for both buyers and sellers.
1. What Exactly is a Private Treaty Sale ?
A private treaty sale is the most traditional way of selling a property. It’s a process where the seller, usually with the help of an estate agent, sets an asking price and then negotiates privately with potential buyers to reach a mutually agreeable deal. Unlike an auction, where bidding is public and competitive, all offers and negotiations in a private treaty sale are confidential between the seller, the buyer, and their respective agents.
This method offers flexibility and control over the sale process. The property is marketed for an unspecified period, allowing time for buyers to arrange viewings, conduct due diligence, and submit offers. The seller is under no obligation to accept the first or even the highest offer, giving them the freedom to choose the buyer who presents the best terms for their situation.
2. How Does the Private Treaty Process Work ?
The private treaty sale follows a structured, step-by-step journey from putting the property on the market to handing over the keys. Understanding this process is crucial for both buyers and sellers to navigate the transaction smoothly.
– Setting the Price and Marketing the Property
The journey begins when the seller and their estate agent determine a strategic asking price. This price is based on a professional valuation, current market conditions, and the prices of similar local properties. Once the price is set, the agent launches a marketing campaign, listing the property on online portals like Rightmove and Zoopla, in their office window, and through their database of potential buyers to attract interest.
– Arranging Viewings and Receiving Offers
Once the property is on the market, the estate agent will coordinate viewings for interested parties. After a viewing, a potential buyer who wishes to proceed will submit a formal offer to the agent. This offer is then presented to the seller for consideration. An offer is not just about the price; it also includes the buyer’s position, such as whether they are a first-time buyer, have a mortgage in principle, or are in a property chain.
– The Negotiation Stage
This is where the private and flexible nature of this sales method truly comes into its own. The seller can accept the offer, reject it outright, or, most commonly, enter into negotiations. The estate agent acts as the intermediary, relaying counter-offers between the buyer and seller until an agreement on the price and other key terms is reached. This negotiation is confidential and allows for a tailored agreement that suits both parties.
– Sale Agreed and Legal Proceedings
Once a price is agreed, the property is marked as “Sold Subject to Contract” (SSTC). At this point, nothing is legally binding. Both parties instruct their solicitors to begin the legal process, known as conveyancing. The buyer’s solicitor will conduct searches, raise enquiries about the property, and review the contract of sale, while the seller’s solicitor prepares the necessary legal documents.
– Exchange of Contracts and Completion
The “exchange of contracts” is the critical point where the sale becomes legally binding. Both buyer and seller sign identical contracts, and the buyer pays a deposit (typically 10% of the purchase price). Once contracts are exchanged, neither party can pull out without facing significant financial penalties. A completion date is set in the contract, which is the day the remaining funds are transferred, and the keys are handed over to the new owner.
3. The Pros and Cons of a Private Treaty Sale
While it is the most popular method, a private treaty sale has its own set of benefits and drawbacks that are important to consider.
– Pros of a Private Treaty Sale
- Flexibility and Control: Sellers have complete control over the process. They can choose their own timeline, take their time to consider offers, and are not pressured into a quick decision. This flexibility allows them to wait for the right offer from the right buyer.
- Privacy and Confidentiality: As the name suggests, all negotiations are private. The final sale price is not disclosed until the transaction is officially recorded with the Land Registry, which offers a level of discretion that is not possible with a public auction.
- Broader Appeal to Buyers: This method is less intimidating for the average homebuyer than an auction. It allows buyers the time they need to arrange mortgage financing and conduct thorough property checks (like surveys) before they are legally committed, attracting a wider pool of potential purchasers.
– Cons of a Private Treaty Sale
- Lack of Urgency and Uncertain Timescales: The main drawback is the potential for the process to drag on for months. There is no fixed deadline, which can lead to uncertainty and frustration. Sales can also “fall through” at any point before the exchange of contracts, forcing the seller to start the entire process over again.
- The Risk of “Gazumping” and “Gazundering”: Because the deal is not legally binding until the exchange of contracts, buyers face the risk of being “gazumped” (when the seller accepts a higher offer from another party). Conversely, sellers can be “gazundered” (when the buyer lowers their offer at the last minute).
- Potential for a Drawn-Out Negotiation: While negotiation is a pro, it can also be a con. A lengthy back-and-forth process can be stressful and time-consuming. If a buyer and seller are far apart on price, it can lead to a stalemate where no deal is reached.
4. Is a Private Treaty Sale Right for You ?
For most people, a private treaty sale is the default and often the best choice. It offers a balanced and controlled approach that suits sellers who are not in a desperate hurry and want to achieve a solid market price. It also provides buyers with the necessary time and security to make one of the biggest financial decisions of their lives. However, if speed and certainty are your absolute top priorities, then other methods like a cash sale or an auction might be worth exploring.