When it comes time to sell your property the method of sale you choose can have a real impact on the type of sales campaign you hold as well as the sales price.
Each property and market is different, and there’s no one-size-fits-all approach when it comes to choosing between private treaty, auction, expressions of interest or off market.
Your real estate agent will be able to advise you on what the best approach might be for your property in the current market. But there are some general pros and cons to consider.
Here are some common sales methods and reasons to use them:
An auction campaign sees buyers battle it out on the day, bidding face-to-face. It can be a very powerful (and emotionally driven) selling method. A typical auction campaign runs for four weeks, with open homes on three weekends and the auction on the fourth Saturday.
The seller sets a reserve price, while competition on the day will determine the outcome. If the property does not reach the reserve or no bids are made, the home is ‘passed in’. At this time, the seller can negotiate with the highest bidder and if this outcome isn’t favorable they can sell by private treaty.
- Can achieve high prices in strong markets
- High clearance rates provide more certainty of a timely sale
- Buyers more likely to be competitive when facing each other
- Home can also sell before or after the auction
- If it doesn’t sell on the day you may need to start over
- Can be nerve wracking for sellers and buyers
- If the reserve price is set too low there can be the risk of selling too cheaply
- If the reserve it too high, there is a risk it won’t sell at all
The most common method of sale is through private treaty. This involves buyers making verbal and written offers, while the home is listed for sale. Usually a guide price is available or “offers over” specified, and the real estate agent acts as the negotiator between the seller and buyers. This is the type of sale most buyers and sellers feel comfortable with, however homes that do not sell and are listed for some time can quickly become ‘stale’.
- Allows the ultimate control over whether to accept offers or not
- Provides plenty of time for back and forth negotiations
- In markets with little competition it doesn’t reveal any lack of interest
- No guarantee of a timely sale
- May not take full advantage of competitive buyers
Expressions of interest
Expressions of interest is less common. This type of selling campaign requires buyers to provide their offers, including the deposit, in writing in sealed envelopes by a closing date. A little like a combination between an auction and a private treaty, it encourages buyers to make their best bid upfront, but does not provide the emotional intensity of an auction.
- Allows some of the benefits of an auction, without the nerve wracking experience
- Requires buyers to put their best hand on the table
- Still allows space for negotiation on the offers presented
- Less commonly used, and less transparent, so some buyers may feel uncomfortable
- Doesn’t provide the competitive experience of an auction
Off market sales are becoming more common in prestige or hot markets as they allow sellers to capitalise on underlying interest without the hassle of going to market.
- Limited (if any) advertising and marketing required by sellers
- A private way to sell, without fuss and neighbors knowing
- Can sell quickly to buyers actively looking
- Sellers don’t need to sell unless they receive an offer they’re really happy with.
- Without a proper campaign there is less exposure, so there can be less certainty that you’ve achieved the best price and explored all possible buyers.