You might be considering selling your house via auction or private treaty. We will discuss the pros and cons of each option.
Selling via private treaty
Private Treaty sales can be used to sell residential property. This is when you set the price you’d like your house to sell for, and your real estate agent negotiates individually with prospective buyers to achieve a sale as close to this price as possible.
REISA President Michael Brock says that selling through private treaty has many benefits. These include:
- Negotiation offers greater flexibility. For instance, a contract can be signed ‘subject to’ certain conditions such as a building inspection or finance approval.
- Flexible listing of your home to sell You don’t need to list your home by a particular date, unlike an auction.
- An auction campaign can help you save money on promotional and advertising costs.
- Sometimes a sale of your house may take longer than an auction.
- You can put your house up for sale so that buyers can inspect it regularly.
- If you or your agent mis-price the market, you might list below the property’s market value, meaning you lose money – or if you price it above the market value, your property might sit empty for weeks or months, generating little interest.
Selling via auction
Auctions allow potential buyers to come together and bid on your property. The auction ends with a winner. This assumes that the highest bidder wins the auction. “A sale by public auction is arguably one of the most exciting, effective and rewarding methods of buying and selling real property,” says Brock.
According to Queensland’s Real Estate Institute, selling property by auction has many benefits.
- An auction requires a three-pronged marketing campaign. A vendor can either sell their property before or after an auction.
- You can choose a settlement date or a reserve price.
- A written marketing plan can help sellers organize their lives and include pre-agreed appointments.
- Auctions can be stressful by their very nature. Buyers are given a time limit within which they must act.
- Auctions encourage competition and result in no price barriers
It is important to fully understand the pros and cons of an auction campaign before you sign up.
- Auctions are more likely to spend more on advertising than private sales. The average budget is between $5,000 and 10,000.
- The vendor is responsible for all advertising costs even if the property has not been sold.
- Agents may try to pressure you into lowering your reserve price during auctions with high-pressure conditions.
- People who don’t feel comfortable with their home being publicly advertised on the internet via an auction might not want to take part.
Now you are familiar with the pros and cons for each method of selling. Which one is best for you?
“Both methods of sale have been working effectively for vendors for many years,” says Brock.
“Your real estate agent will be able to offer you more advice on which method is most suitable for you and your property.”