Auctions and sale by private treaty are the two most commonly used methods of selling property in Australia. Once you’ve decided to sell your home, you’ll need to think carefully about which method will work the best for your particular needs. It’s a good idea to sit down and have a serious discussion with your real estate agent about which method will suit your situation. You should take into account not only the costs that each method will incur, but also how effective each is likely to be.
(A good real estate agent will take your particular market and situation into account when dispensing advice on whether to sell by auction or private treaty. You can find an agent to work with by comparing agents at LocalAgentFinder).
Sale by Auction
In an auction setting, individual buyers can place bids against one another. The highest bidder wins the property that is up for auction. Before the auction date, you and your real estate agent will need to agree upon a reserve price for the property. This will be the lowest bid that you would be willing to accept.
Property auctions are quite popular in urban areas, because there can be a high demand for well-situated properties. Cities like Melbourne and Sydney are common locations for property auctions. An auction can result in bidding wars, with a high level of energy. However, successful sales will arise from a realistic reserve price having been set.
One benefit to auctions is that they are held at a certain date and time. This means that you have a predetermined, well-defined time period during which you’ll allow potential buyers to come see your home during an open for inspection. Many sellers find this preferable to juggling the time commitment of indefinite open houses with the responsibilities of work and family life. Selling by auction means you know just how long you will need to showcase your home, while a sale by contract could potentially take longer.
Once a buyer has placed a winning bid at the auction, they must pay a deposit and there is no cooling off period. This helps ensure that buyers are committed. If the buyer has any concerns or questions about issues such as building inspections, they must address these before the auction begins.
One possible downside of the property auction is that if the reserve price is not met, then the property does not generate a sale. This can be problematic because although it’s possible that a sale can be generated in the days after the auction, in some cases the money you have spent on an auctioneer and marketing your property will not result in a sale at auction. You’ll want to take this risk into account if you choose to sell by auction, and discuss it with the agent of your choice. Compare agents at LocalAgentFinder to find an expert in your area.
Sale by Private Treaty
Another popular option is to sell your property by private treaty. This involves setting a specific price for the house, and then waiting for a buyer to agree to this or make an offer. When you sell using this method, there is a cooling off period included in the contract. This occurs after you and the buyer have agreed upon an asking price and other requirements, and have signed the corresponding contracts. After these actions have occurred, the property is taken off the market and the buyer has their chance to secure financing and conduct inspections. They may also obtain reports regarding permits and zoning plans as part of the conveyancing process.
The seller is able to make specific sale requirements, such as the term of settlement and asking price. However, the buyer can also request to make the sale contingent upon factors such as the sale of their own home, their ability to obtain financing, and building inspections. Because of this, there is always the chance that the sale could fall through during this cooling off period.
Although the exact time frame will depend on market conditions, a sale by private treaty could take longer than a sale by auction, and it could involve more negotiation. Yet the number of offers you receive gives you and your agent important feedback on the accuracy of your sale price. Rather than waiting for the results of an auction to make adjustments, you can afford to be more flexible with your pricing plan.
Bear in mind that you can expect to pay real estate agent fees and marketing costs for both private treaty sales and property auctions. This doesn’t make one method any more cost effective than the other. As you make your decision, you’ll want to talk to your real estate agent about what costs will be involved as well as the current market you’re in. This can help you reach a decision.
Auction or private treaty – what’s next?
It’s a good idea to use a qualified, licensed real estate agent who knows your specific area well. You can compare agent qualifications at LocalAgentFinder. Start comparing agents and find the right individual to help you choose whether to sell by auction or private treaty.