This type of sale is the most popular method of selling and is when a property is listed at a specified price or with an indicative price range by a real estate agent or privately by the owner.
- You have greater control over the sale as you have set a price that reflects the price you want to achieve for your property.
- If you have chosen a good agent who is a skilful negotiator, you have a good chance of receiving your asking price.
- Many buyers like the fact that the price has been defined and prefer to buy through private treaty.
- You have time to consider offers put to you, via the agent and by potential buyers.
- You can extend the time your home is for sale indefinitely, which is helpful if the market is flat.
- You save on the expenses associated with auctions.
- If the price is set too high, there is a possibility the property won’t sell and there’s a risk of the property becoming stale in the market.
- If the price is set too low, you may miss out on maximising the value of your asset.
- The buyer usually has a cooling-off period and can withdraw from the contract without penalty, up to the point of contracts being exchanged.
If you have a property with unique features and qualities you may consider selling by auction. There is usually a four week intensive marketing campaign followed by a set date and time to conduct the auction. The property is offered up for bids and bids are taken and then the property is sold to the highest bidder (subject to the pre-agreed reserve price being met).
- The primary benefit of selling at auction is that no firm price needs to be set and competitive bidding may result in the vendor achieving a higher price than expected. This will obviously depend on supply and demand in the area.
- The reserve price placed on the property can be set just before the auction occurs, by which time the vendor has had several weeks worth of feedback to consider from real estate agents and interested parties.
- Auctions provide a fixed amount of time in which the house will be sold.
- It is in the interest of your appointed agent to provide maximum marketing exposure.
- The buyer signs the contract and pays a deposit on the day of the auction, freeing up the vendor to buy elsewhere.
- One or more buyers may make a pre-auction offer, which gives you negotiating power.
- There is no cooling-off period, so if the buyer backs out they lose their 10% deposit.
- Many buyers are put off by the auction process and the success of any auction is dependent on who turns up on the day.
- With the sale of most items you start at a high price and come down, but with an auction the opposite applies. This means that you may not get the highest possible price the buyer would have been prepared to pay.
- If the reserve price is not met and the property is ‘passed in’ (fails to sell), the vendor will still have to pay for marketing expenses and the costs of the auctioneer.