Method of sale

Choosing the best approach to deliver your sale

Private treaty is the most common method of sale. However, there are alternatives, and it is useful to be aware of them. Depending on your requirements, the nature of your property and your timeframe, it may be appropriate to sell by either informal tender or by auction.

Sale by private treaty

This is the traditional and most common form of sale for residential property in the UK. The property is placed on the ‘open market’ by an estate agent on behalf of the vendor, usually with an indication of price. This may be quoted as a ‘guide price’ or expressed in several different ways including ‘Offers in the region of’, ‘Offers based on’ or ‘Offers in excess of’. Your agent will advise you on the pricing strategy and suffice to say that the figure and the phraseology are important.

Interested parties are invited to view, carry out investigations and to make offers. Negotiations take place to agree terms acceptable to both parties. Such terms will not just be the agreed sale price but could include agreement about other items and chattels to be included, and the crucial detail about timing for exchange of contracts and the completion date. More complex properties may require agreement relating to tenancies and vacant possession, the transfer of agri-environmental schemes and entitlements, transfer of staff, holdover for harvesting and a whole host of other matters on which you will need expert guidance.

When terms are agreed, a memorandum of sale is drafted, agreed, and circulated to all parties. At this point the property is considered ‘under offer’ or ‘sold subject to contract’. The legal process follows, hopefully culminating in an exchange of contracts, at which point the seller and buyer are legally committed to the transaction with an agreed completion date for the property to be transferred and the private treaty sale process ends.

Sale by informal tender

An informal tender sale should be considered when a property is likely to generate a lot of interest, with several parties keen to purchase it. It can be an excellent way to crystalise competitive interest and ensure that the highest sale price is secured. In this scenario, potential buyers can find the competitive bidding of a traditional private treaty sale alienating due to the lack of transparency, and so may fail to properly engage with the process. An informal tender sale clarifies the bidding process, providing a layer of transparency. It also helps to manage expectations, as it sets out how and when people should make an offer to buy, and how the offers will be assessed.

When the sale is launched, a date is set by which interested parties should make their offer to purchase. Along with their offer, prospective purchasers are asked to include a variety of information which enables confident assessment of their ability to buy the property, and also outlines any conditions attached to the offer. In this way, interested buyers put forward their best bids for consideration in a semi-formalised manner. As the seller, you are not required to accept the best, or even any, of the offers, but rather you can carefully decide which purchaser most clearly matches your sale aspirations and proceed accordingly.

An informal tender sale can be seen as an effective way to draw together and agree a sale in a set timeframe whilst preserving your ability to select your buyer.

Although there is a date by which all offers must be submitted, once the offer is accepted there will still be a conveyancing process in a similar way to a traditional private treaty sale. If you think that you would like to agree a sale and create a legally binding contract at the same time, then an auction may be the sale solution you need.

Sale by auction

Mistakenly, some people consider auctions most suitable for distressed properties, but this rationale is increasingly outdated, and a broad variety of properties are now sold this way. Residential, commercial properties and land are regularly sold via auction. An auction can be used to launch a sale or sometimes to conclude the sale of a property that has taken longer to sell than initially anticipated. It is also useful for a property sale where several buyers have expressed interest in purchasing and is a good way to conclude negotiations when needed.