The process of selling a house seems easy, but there are a number of factors that can come into play. One that starts right at the gate is whether to sell by auction or through a private sale. In today’s property market the combative nature of the auction pitting buyer against buyer seems appropriate to secure a higher sales price, but is it always effective?
Auction sales are designed to generate a sense of urgency, with a set date that compels potential buyers to get competitive and outbid so that the sale goes ahead. Auctions also provide sellers with protection for low sale prices with a reserve price, which means that the property will not sell before it hits an agreed-upon price. Auctions also allow owners to set specific terms of sale or if they want an unconditional sale (no cooling off at auction).
There are limitations to auction sales, however. Additional costs may be incurred when selling the property via auction, and auctions may not be suited to buyers who wish to purchase subject to finance. Similarly, if there is too much evidence of accurate sales, the auction may not be the best method for selling as there is too much awareness of what the current sale prices may be for similar units.
Private sales can be a lot less intimidating for buyers than an auction purchase, which pushes for quick action and decisions, and allows sellers to consider offers by those buyers on their properties/homes for a little longer. Private sales are also more suited for sellers who do not have an urgent need for the property to sell and may be more open to accepting different sale terms (such as an extended settlement period, sale subject to finance or subject to the sale of the buyers home). It can also be less expensive to sell via a private sale as the marketing campaigns for private sale properties are usually not as extensive as those of an auction, which requires people to be present at the auction time. Private sales are also able to provide the seller with a modicum of privacy through the negotiation process and allows the specific details of the sale to be veiled and kept out of the public eye.
There are limitations to selling via private sale, however. As private sales are usually subjected to a cooling-off period, buyers have more time to change their minds after contracts have been signed, which can mean that the sale may not go ahead if they decide against it. It can also take longer to sell the property through a private sale method, as there is no specific end date or deadline to give that sense of urgency that can push through a sale. There is also the issue that prices in private sales for properties can be negotiated down, compared with auctions where the bids may actually exceed projected price outcomes. Unfortunately, negotiating down with private sales can actually mean that the property is less likely to be sold for more than the asking price.
Before selling a property or home, consult with your agent as to what process could be right for you.