Auction, private treaty or expression of interest: Which is the best strategy for selling your home?

Auctions always attract attention, as the loud, emotional and often stressful spectacle is in many cases considered one of the most effective ways to sell property in a hot market.

But it’s not the only way to sell a property, and across Australia private treaty is the most common method.

The strategy you choose to get the best result will depend on the type of property and your local market.

Is an auction the best way to sell a house?

At an auction, interested buyers submit offers to buy a property at a specific time and place, normally on site but sometimes at auction rooms. The bidder who makes the highest offer is the successful purchaser, and must immediately pay a deposit, usually 10 per cent. The sale is final and there is no cooling-off period.

Auctions are preceded by a sales campaign that normally runs for four weeks. The time limit creates a sense of urgency and competition among buyers, and because offers are made publicly, it gives a good indication of the market value of a property.

Creating competition is the key benefit of an auction. There are very few occasions where  auctions are less effective.  It’s very important for vendors to know the true value of their home, and they will only see that if there’s true competition.

It’s best to discuss the suitability of an auction with a number of agents in your area, as the effectiveness of an auction often depends on whether it is the preferred method of sale by the local demographic.

When is private treaty most successful?

Private treaty, also known as sale by negotiation, is when a property is advertised at a set price or guide. Buyers submit offers in writing to the vendor, who accepts the most favourable offer.

The agent handles negotiating with the buyer, and advises the vendor on whether to accept or decline an offer based on their estimation of the value of the property and market expectations.

Private treaty sales have a standard cooling-off period, which varies from state to state. During this time, buyers can carry out building and pest inspections or have a conveyancer conduct investigations.

This can make the sale less stressful for buyers than an auction, where inspections need to be undertaken before sale.

And, unlike an auction, submitting an offer makes it easier for buyers to determine the final price, which minimises time wasted inspecting properties that sell outside their budget.

A lot of venues prefer auction, but private treat has its place. A unique property may go to private sale rather than auction, because it may be seen as a property that may take a while to sell. If that’s the case the auction might not create the right environment.

Baini said private treaty sales were often necessary when there was a high supply of a certain property type.

Private treaty sales are mainly necessary when there is a high supply of a certain type of property. Like in the case of selling a unit block where there have been three sales in the last six months, and they’ve all been within $10,000 of each other.

What is an expression of interest (EOI)?

In an expression of interest or tender campaign, buyers are invited to submit their best and final offer by a certain closing date, at which time the vendor chooses the most suitable offer. Akin to a slow, blind auction, buyers can also set terms and conditions.

The closing date creates a sense of urgency as with an auction, but the private nature allows the accepted price to be kept discreet.

Expressions of interest are common for very expensive or unique properties.  The only way to sell [unique or expensive properties] is expression of interest, because you’ll probably only get two offers, and the gap could be considerable.

Expression of interest campaigns can help realign vendor expectation with the market. If their expectations are too high, it can be best to put it on expression of interest and let the buyer tell them what their expectations should be.

If you or anyone else you know is looking for advice on selling your home, the team at  Professionals Padstow is available to offer all the guidance and answers you need. If you’d like to share your selling story on what worked for you, we’d love for you to share them with us, please comment over at our Facebook page I Love Padstow to Picnic Point

Source: domain.com.au

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