Auction vs Private Treaty: Which Is Better for Selling in NSW?

Your agent sits across the table and lays out two ways to sell: take the property to auction or list it with an asking price and negotiate. Both are presented as the right call, often in the same conversation, and you are the one who has to decide before the agency agreement is signed. 

Auction vs private treaty in NSW: neither method is better in the abstract. The real difference is what each one commits you to the moment a buyer says yes, and that is worth understanding before the campaign starts rather than after.

What Is a Private Treaty Sale in NSW?

A private treaty sale is a sale where you receive offers over an open period and negotiate the terms until you accept one. There is no fixed end date. The property stays on the market for as long as you are willing to keep it there, and offers arrive at whatever pace the market sets.

Price is only one part of what gets negotiated. A buyer may ask for a longer or shorter settlement period, a smaller deposit, or conditions such as finance approval or a satisfactory building and pest inspection. You are free to counter any of those, and nothing binds either party until contracts are exchanged.

What Is an Auction Sale in NSW?

An auction sale is a public sale held on a set date, where buyers bid openly and the property sells to the highest bidder at or above a reserve price. The reserve is the minimum figure you are prepared to accept, and it must be given to the auctioneer in writing before the auction begins. The campaign runs to a fixed end date rather than an open listing period.

Once bidding reaches or passes the reserve, the property sells on the day. The successful bidder signs the contract and pays the deposit on the spot, and contracts are exchanged then and there. If bidding stops below your reserve, the property is 'passed in', which means it did not sell under the hammer.

What Each Method Commits You To as a Seller

The difference between auction and private treaty that affects you most as a seller is contractual because it determines how secure the sale is once a buyer commits. For residential property in NSW, a contract for sale must be prepared and complete, with the prescribed documents attached, before the property is offered for sale. What changes between the two methods is how much room you have to finish that work.

• Contract Readiness: Both methods require the contract to be prepared before a residential property is marketed, but an auction creates a firm deadline. Because the successful bidder is committed at the fall of the hammer, any necessary contract changes or outstanding issues should be dealt with before bidding begins.
• Cooling Off: No cooling-off period applies where a property is sold by public auction, or where contracts are exchanged on the same day as an auction at which the property was passed in, so a sale under the hammer is secure from the moment it is made. A private treaty buyer generally has 5 business days to withdraw, which means the buyer may still exercise their cooling-off rights after exchange unless those rights have been waived with a section 66W certificate. Learn more about cooling-off periods in residential conveyancing.
• Conditions: Auction buyers generally need to arrange finance, inspections and contract review before bidding because a successful bidder is committed at the fall of the hammer and there is no cooling-off period. With a private treaty sale, terms may be negotiated before exchange, including conditions relating to finance or inspections.
• Deposit: At auction, the deposit is payable on the day, usually 10% unless you have agreed to accept less. Under private treaty, the deposit amount can form part of the negotiation.

Offering the property for sale covers showing it to a prospective buyer or giving out the address, so that the deadline arrives before the first inspection rather than at the auction date. The difference is that a private treaty campaign leaves room to correct something afterwards, while an auction does not.

Which Method Suits Your Property?

What is the best way to sell property in NSW? The truth is no single method suits every property. The choice depends on the property rather than on a general rule, and four factors do most of the work.

• Buyer demand for the property type: Competitive bidding relies on more than one buyer being ready to act on the day. 
• Pricing: A property with few comparable sales may benefit from letting the market set the figure.
• Timing: An auction gives you a fixed end date, which matters if you are buying elsewhere or settling an estate. 
• Your comfort with the auction outcome: If the reserve is not reached, the property may be publicly passed in before negotiations continue with interested buyers.

Selling property at auction in NSW fixes the timeline and can produce competition on the day, although a property that does not reach reserve is passed in publicly. Private treaty allows negotiation on price and terms and keeps the result private, with no guaranteed end date.

What to Have Ready Before You Commit to a Method

Whether you sell residential property in NSW by private treaty or auction, the contract needs to be prepared before the property is marketed:

• a contract for sale prepared and complete with the prescribed documents attached, including the title search, sewerage diagram, planning certificate and any pool compliance documents that apply
• a decision on the deposit amount you will accept and the settlement period you want written into the contract
• enough lead time for all of it to be finished before marketing starts, not while it is under way

An auction also creates a fixed date for the campaign, so it is worth allowing enough time for any questions, requested amendments or pre-auction negotiations to be dealt with before auction day. If you would like the conveyancing cost confirmed before you sign an agency agreement, you can request a quote and have that settled alongside the rest of your preparation.

How a Conveyancer Helps You Sell by Either Method

At Paul Denny Conveyancing, we prepare your contract for sale with the correct documents attached, so the property can be marketed without delay. We also advise on the deposit and settlement terms before the property is listed, while those terms can still be adjusted without renegotiating with a buyer.

We also stay available in the days before an auction. Pre-auction offers, contract amendments requested by a bidder's conveyancer and late questions about the prescribed documents can all arrive in the final week, and each one needs an answer before auction day. You can read more about how we can support you when selling property in NSW, or speak with our NSW conveyancing experts about the method you are considering.

Frequently Asked Questions

Can I negotiate with the highest bidder if my property is passed in?

Yes. The highest bidder generally gets the first opportunity to negotiate with you once the property is passed in. 

What changes at that point is the cooling-off position: If contracts are exchanged on a later day, the usual residential cooling-off rules generally apply unless the cooling-off period is waived or another exception applies. That difference affects how secure the sale is, so it is worth settling with your conveyancer ahead of auction day.

Can I accept an offer before auction day?

Yes, if you choose to consider offers before the auction, which agents often advertise as 'unless sold prior'. If you accept an offer before auction day, the sale proceeds by exchange of contracts rather than under the hammer. If you want the buyer to waive their usual cooling-off rights, their solicitor or conveyancer can provide a section 66W certificate before exchange. 

Without one, the buyer keeps that right and the sale is less firm than a sale under the hammer. The contract is already complete before marketing begins, so the difference is that you need to be ready to exchange at any point in the campaign rather than only on auction day.

Can I switch from private treaty to auction partway through a campaign?

Yes, and campaigns move the other way as well. The contract must already be complete before the property is offered for sale, so a switch to auction does not create that requirement, it sets a date on which a successful bidder will be committed to the purchase without a cooling-off period. 

A switch to private treaty does not change the documents already prepared, although a sale by negotiation generally carries a cooling-off period that a sale under the hammer does not.

What happens if the buyer cannot settle after winning at auction?

The deposit is generally at risk for the buyer. Where a buyer fails to complete, you may serve a notice to complete and, if settlement still does not occur, you may be entitled to terminate the contract, retain the deposit and pursue any further loss, depending on the terms of the contract. The property can then be placed back on the market. This is one reason the deposit amount and settlement period are worth deciding carefully before the campaign starts.

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