Land and rural property sales generally take the form of either a Private Treaty, Informal Tender or Public Auction sale. The method of sale chosen must consider the attributes of the property being sold, the prevailing market conditions and the anticipated response of would-be Purchasers and their professional advisors.
In 2022, we have experienced a buoyant rural property market across the north-west with good interest in all rural property which has helped marketing and selling.
In this article we discuss three sale methods and which have worked best through this sale season.
Private Treaty Sale:
The most common method of sale which affords all parties the greatest degree of flexibility and time. The Vendor is free to enter negotiations early in the marketing period or wait for further offers. With multiple interested parties sales can be concluded by a ‘final offers’ scenario, or a bidding situation over the telephone.
Whilst flexibility may be an advantage it can also be a disadvantage. Private treaty sales are not legally binding until exchange of contracts, during such time the Purchaser may withdraw or look to renegotiate if something comes up, such as a poor septic tank survey or a change in the market. In terms of the conveyancing process the legalities are completed after the offer has been accepted and a swift sale is dependent on both parties’ solicitors working promptly.
Auctions have been around since 500 B.C and, with the exception of the ‘Dutch Auction’, this method of sale sees the property being sold to the highest bidder. The property is usually marketed for sale with a set number of viewing days and the legal pack available for prospective purchasers to scrutinise before the auction date. On the fall of the hammer the successful bidder is legally bound to purchase the property. Auctions can be favoured due to their certainty and set timings between the fall of the hammer and completion. With a good attendance and heated bidding, properties can make in excess of their guide price. However considerable marketing costs and legal fees can be incurred prior to the certainty of an acceptable bid being received. Whilst reserves are set pre-auction these must be within certain parameters and control in decision making can be lost which may be a key consideration, particularly in regard to multiple lots.
The property is openly marketed for an allocated period of time, with a date set for the receipt of best and final written offers.
This method places impetus on interested parties to come forward and make a bid compared to the private treaty method where parties can register a note of interest and hold back to see who else is forthcoming. The major benefit to this method of sale is that the highest bid can be an extreme, whilst the best auction bid is only ever one bid higher than the previous bid. The Vendor also retains flexibility and is not bound to accept the highest offer, whilst being able to determine the exchange and completion dates under the impression that interest in the property is good.
Owing to the high level of interest and increased diversity and range of Purchasers, we have seen exceptional success with the informal tender sale route – many of our land sales have taken this format and sold higher than we believed they would have at auction. This method has allowed our Vendors to retain control whilst setting their own desired timings and retaining some privacy. There will always be a place for auctions and our latest sale of Havelock House was such an example. The 170-acre farm required considerable modernisation and refurbishment but successfully sold at auction as a whole for £1.71 million. The majority of our sole residential sales have been by Private Treaty with final offer deadlines set when a particularly high level of interest has been received.
To discuss a rural property sale or purchase please contact our experienced team.