Auctions don’t work in a property market this tough.

And in a country that lives and breathes the auction process, everyone is figuring out how to function without them.

In Inner Sydney, auctions are effective because they create an open environment for buyers. And a competitive space for sellers when demand is heightened.

Except right now, that’s not happening.

With our market now on the defensive, the pressure quickly mounts on sellers in auction campaigns to drop prices, creating a risky environment.

That leads us having to look at alternative options.

The rise of the private treaty is here.

For seasoned auction goers this might be unfamiliar territory, but it has its own benefits.

In the current market, negotiating by private treaty is gold for reducing the rigidity in the campaign. Think about this:

A four-week auction campaign is a fixed process, to a deadline, with a property often appearing stale and disused to a buyer if an outcome isn’t met in that period. A risky scenario for sellers.

A quick calculation of clearance rates tells us that, under current conditions, 70% of properties will likely end up in that stagnant space.

On the flip side, private treaties provide flexibility around timing and pricing, bringing some much-needed fluidity to an unpredictable market.

Private treaty: competitive or not?

On the weekend, a successful private treaty sale happened at 104 Surrey Street, Darlinghurst. Michael Kirk had a number of bargain hunters asking to get involved “if other offers came in”.

But the private treaty was only open to committed buyers. With 2 buyers acting without waiting for other offers, it started at $1.65 million and went on to sell for $1.73 million.

The competitive environment created for that sale was reminiscent of an auction, but was more in tune with today’s market.

Meanwhile, the process is also transcending price points. Adrian Oddi sold 7 Paul Street, Balmain East last week by private treaty for $5.51 million. And Andrew Liddell sold 15 Burnell Street, Drummoyne for an undisclosed amount also around $5 million.

Buyers aren’t looking to sit on their hands. They’re waiting for a price guide that ignites their impulses.

Delivering on private treaty

When it comes to buying and selling property, private treaty is the new safe space. But not everyone is set up to deliver that for sellers.

Experienced agents are in a better position to deliver over their contemporaries here. And a network of agents working together is a hugely valuable channel for sellers.

In recent years, BresicWhitney’s offices have created a dynamic database of active buyers and sellers, visible to all agents. That means our agents are able to lean on each other, support each others’ campaigns and introduce buyers to new properties.

Without that crossover, sellers are launching into the unknown with each campaign, to lesser levels of traction. But with it, conversations and indeed transactions, happen faster.

Where to next?

Selling via private treaty relies less on market momentum, and more on agents’ abilities. It’s their job to engage people, identify the buyers, progress them through the negotiation stage, and make results happen.

People hunting for Sydney property right now know the buyer pool has thinned.

Agents need to have a plan for how to deliver results in this environment. Because right now, the support of a skilled agent is more paramount than ever.