There are two commonly used methods for selling a property: Sale by Public Auction and sale by Private Treaty (For Sale). It has been an on-going debate in the real estate industry as to what method of sale is better, there is no golden way as both methods have their advantages, and some properties will benefit from one means more than the other.
Sale by Public Auction
Auctions have many benefits for the vendor as they force a more competitive and fair environment for purchasers. Some of the benefits with an Auction include:
Timeframe on the selling process.
While our days on market are the best in the region, selling by Private treaty is an unrestricted sale process that can carry on for long periods. Whereas, with an auction, the buyers have a set timeframe to work towards, usually three to four weeks. This ensures that buyers give the property their full attention during the selling period. Buyers must also have their finances ready by the date of the auction. This invariably leads to a more focused buyer and a more successful outcome.
No cooling-off period.
A sale made under the hammer is definite, and there is no cooling-off period, eliminating the potential for the buyer to change their mind and withdraw.
No advertised price.
The promotion of the property during the marketing period can attract interest from a wide range of potential buyers. If there is strong demand, interested parties will compete with each other, which can sometimes result in the sale price exceeding your expectations. This also avoids the unnecessary risk of either overpricing or underpricing a property.
Buyers compete against one another rather than against the vendor. Eliminates the difficulty in determining a price, as the reserve price for a property is typically set just before the auction. Vendors will have the benefit of 4-6 weeks of market feedback to assist in determining the appropriate reserve for a property.
Ultimately, the value of any property is what the buyer is willing to pay, and a competitive auction can help reach their maximum.
Sale by Private Treaty
A Sale by Private Treaty has many benefits for the vendor as they are less intimidating for buyers and allow more time for negotiations. Some of the benefits with private treaty include:
Time to consider.
Having no specific time limit allows more time for negotiating and consideration of offers. If for example, a vendor has an offer close to their asking price but is aware that other people are interested, they can wait to see if they get a higher offer. At an auction, the vendors’ decision to accept or pass in a property is more urgent, potentially resulting in the loss of a sale or selling for under reserve.
No urgency to sell.
Private sales are more suited to sellers who do not wish to sell urgently. It is suitable for people who may be open to accepting different sale terms, such as a sale subject to finance, an extended settlement period or a transaction subject to the sale of the buyer’s home.
A private sale is not public like an auction and provides more privacy for everyone involved. The transaction occurs through a negotiation process so the sale will be out of the public eye. The element of privacy can be more appealing to people, both buying and selling.
The fast-paced nature of an auction can be very daunting for many people, both buying and selling a property. Selling by private treaty allows more time for buyers to consider the purchase and make more rational decisions. Sale by Private Treaty is more appealing for buyers who wish to purchase subject to finance because at an auction when a deal is passed the bid is then unconditional.
Choosing between selling at Auction or by private treaty is a tough decision. It can be the difference between selling high or not selling at all but don’t worry there are professionals who can help determine what method will be best. When listing with Clark NextRE your sales agent will recommend a method of sale based on current market conditions, property type and the needs of you, our valued client.