Which method of sale is best for your property
Methods of Sale | Reading Time: 4 Minutes | October 2020
Which method of sale is best for your property?
When it comes to selling your property it can be difficult to know which method of sale is the right one to choose. From auction through to tender and negotiation, it’s all about choosing the method that will work the best for you and your property.
Should I sell my property at Auction?
Property auctions have been growing in popularity in recent years, particularly recently.
A property auction is the method of sale used when a property is offered for sale subject to a reserve price in a fast-paced, public sale. The ‘reserve price’ is the minimum amount the vendor will accept to sell the property. Buyers generally won’t know the reserve when the auction commences (other than when the auction is brought forward, as per below). Subject to the reserve price being met, the highest bidder becomes the purchaser. When purchasing a property at auction all bidders must be unconditional, with conditions such as a building report, LIM or finance satisfied prior to auction day.
With this method of sale the process is short and focused, and long negotiation periods are eliminated. Auctions are very successful when more than one buyer is interested in a property as competitive bidding can result in a premium price being achieved.
An auction date can be brought forward if a purchaser submits an acceptable, unconditional offer. In this circumstance all buyers will be notified of the new date of the auction and bidding will begin at the purchase price offered.
What about selling with a list price?
Selling by list price or advertised price was once the norm, but others methods have come to rival it for popularity in recent years.
What's the ‘right’ price for your property? No one knows for sure, so choosing a list price takes a certain amount of confidence. It is important to get the price right: too high and you'll scare off potential buyers; too low, and you'll do yourself out of money.
Even when a property has been listed with a price, in a competitive market a purchaser will often submit an offer higher than the listing price to secure the property. A recent example of this is a property listed by Crockers at $689,000 which received multiple offers and sold for $720,000.
This method of sale certainly does have its place, particularly in a flat real estate market where it gives buyers more certainty. It can also attract buyers who are not able to buy at auction due to conditions around their finance or other issues.
Should I sell my property by negotiation?
Selling a property by negotiation is a good option if the price range for your property is difficult to gauge because of movement in the market or your property is unique.
With sales by negotiation, rather than going to market with a price, a price guide is provided by the agent when buyers enquire.
What about sales by tender or deadline sale?
In the tender process, your property is promoted for its features and benefits without a price. Potential purchasers compete in a confidential process within a specified deadline, aiming to create competition, urgency and a better price. All offers are submitted into a tender box in a sealed envelope, and are opened on the tender date for the owner to consider.
The purchasers can compete on a conditional or unconditional basis, and they choose their own possession date. No offer can be considered prior to the specified deadline, but after that date you have the opportunity to negotiate with your preferred offer and purchaser on price and conditions.
A modern alternative to a tender is the deadline sale. This process has become more popular in recent years due to its flexibility. Properties are often sold via deadline sale (unless sold prior) - this means that a purchaser can submit an offer prior to the set deadline. If this offer is at an acceptable level the deadline can be brought forward.
Expressions of interest
When asking for Expressions of Interest, your property is promoted for its features and benefits without providing a price. The terms and conditions of the sale will be in your favour; for example, you choose a suitable possession date.
Although the sales process has a set time frame, with Expressions of Interest the vendor has the ability to sell the property prior to the designated date, which is not the case under sale by Tender.
Which method should I choose?
It can be hard to know which method is the right one for your property, but this is an area where an experienced real estate agent can guide you in the right direction.
Your agent is a property expert and will advise you on which method of sale they believe best suits your property and your needs. Together you can decide which option to choose, after considering your needs and the current market conditions.