Private sale, private treaty and auction: what the terms mean in NSW

The two meanings of private sale

The first meaning is selling without a real estate agent. The owner runs the campaign and there is no commission. This is also called for sale by owner.

The second meaning is selling by private treaty rather than by auction. The property is listed at a price or a price guide, buyers make offers, and the vendor negotiates. In this sense a property sold through an agent is still a private sale, because it was not auctioned.

The two are independent. A property can be sold by private treaty with an agent, by private treaty without an agent, or by auction with or without an agent. When someone says private sale, it is worth establishing which one they mean.

How private treaty works

The property is advertised with a price or a price range. Buyers inspect, then submit offers, which the vendor can accept, decline or counter. There is no fixed deadline, so negotiation happens one buyer at a time or in parallel if several are interested.

The contract becomes binding on exchange, when both parties sign and the deposit is paid. Before that point either side can walk away.

A residential property sold by private treaty carries a cooling-off period of five business days, ending at 5pm on the fifth business day after exchange. A buyer who rescinds during that period forfeits 0.25 percent of the purchase price. A buyer can waive the cooling-off period by providing a section 66W certificate, signed by their conveyancer or solicitor, which is common where the buyer is ready and wants to secure the property.

How auction works

The property is marketed for a set campaign, usually four weeks, ending in a public auction on a fixed date. Bidders must register. If the reserve is met the property sells under the hammer, and the contract is signed and exchanged immediately.

There is no cooling-off period at auction. A buyer who bids has to be certain, with finance arranged and the contract already reviewed by their conveyancer, which is why auctions filter out unprepared buyers.

If the property does not reach the reserve it is passed in, and the vendor usually negotiates with the highest bidder straight afterwards. A property that passes in publicly carries a stigma for a period, which is the main risk of the method.

An auction in New South Wales must be conducted by a licensed auctioneer. A private vendor can engage one directly for the auction day without engaging an agent for the campaign.

Which method suits which property

Auction works best where the value is genuinely uncertain and competition is likely. A property with an unusual feature, a wide possible price range, or strong demand in the suburb can benefit from putting several buyers in a room with a deadline.

Private treaty works best where comparable sales give a clear picture of value, which describes most standard residential property. It is also less exposed: there is no public moment where the property visibly fails to sell, and buyers who need finance approval are not excluded.

For a vendor selling without an agent, private treaty is generally the more practical method. It does not require an auctioneer, it does not compress the campaign into a fixed date, and it allows offers to be assessed carefully rather than in real time.

What does not change either way

The Contract for Sale must be prepared before the property is advertised, regardless of method. The disclosure documents that attach to it are the same. Settlement follows exchange on the agreed period, commonly six weeks.

The marketing requirements are also the same. Both methods depend on the property reaching buyers on the major portals, being photographed properly, and being priced against real comparable sales rather than hope.