When it comes to selling your property there are many things to consider in the process, but it all begins with the big question, do you go to auction or go down the private sale route?
Selling a property for a high price is the desired outcome for both the vendor and the real estate agent but the decision of which method to use to achieve this, while also considering what best suits your needs as the vendor, isn’t an easy feat and can be overwhelming and even daunting decision.
An auction is a public sale of a property that is conducted by an auctioneer, who is either the estate agent or an outsourced auctioneer. Prospective buyers will all gather at the property on the day of the auction to bid, with the property sold to the highest bidder at the seller’s discretion.
The process of a private sale involves an agent advertising the property and prospective buyers are invited to make offers to the real estate agent who then presents the offers to the vendor.
With Australian auction clearance rates falling over the past year, more and more vendors are expressing an interest in listing their property for private sale, however, there are several factors to be considered before making the final decision.
Compare the property to others in the same market
Many vendors will instantly assume that because a property is valued at a high price point that it will be suitable for auction but this is not always the case.
When it comes to selling a property at a premium price, vendors need to look at how the property is unique when compared to others on the market.
An auction is the best way to achieve the best price if the property is unique and in high demand, with buyers more willing to pay a premium price for properties that don’t come on to the market that often. This creates urgency and a fear of missing out which encourage competitive emotional bidding.
With that in mind, an agent will typically recommend a private sale when the property is not unique, and when there is not enough competition to warrant a bidding war
For example, if the property is a standard two-bedroom apartment in a block of other similar apartments, located in an area with several apartments nearby, then an auction campaign is less likely to be effective.
Talk to different agents to see how they will market your property
Selecting the best agent can be a challenge in itself but it is crucial to look further than just a commission cost and ask how they would choose to market your property.
The way that real estate agencies can market a property now is very different to 10 years ago, therefore vendors need to look for an agent who offers new style marketing campaigns that will make your property stand out from the rest.
Social media and digital marketing are just some of the new technologies and online tools that are readily available to promote properties, yet there are still agents who are stuck in their old ways and neglecting these resources in favour of outdated and ineffective marketing.
Vendors should have an upfront idea about what to expect from their marketing strategy and choose an agent that will go further than traditional methods such as flyers and newspaper advertisements.
Choose the option that will give you peace of mind
Vendors may be well-informed and familiar with the process of auctions and private sales but there still needs to be a realistic conversation between the agent and the vendor that goes further than the property itself.
An auction campaign will typically span six weeks, therefore a private sale will be more suitable for a vendor who is keen to sell their property quickly. There are also buyers who may be eager to move into a new home and may not want to wait six weeks for the auction.
The process of itself selling a home in a big spectacle does not tend to appeal with vendors who prefer to handle their business more privately.
If there are other similar properties on the market, we tend to see these buyers concerned with privacy more comfortable with purchasing a property in a private sale, rather than go through the process itself of bidding in an auction.
Ultimately, the decision to auction or privately sell needs to be taken case-by-case since every property is different. Vendors need to consider whether they prefer the peace of mind of a private sale or the high-pressure circumstances of taking a property to auction.
It comes down to a realist conversation with an agent that will manage your expectations as a vendor. This includes discussing not only how going to auction or private sale will work for the property, but also the planned marketing strategy to make your property stand out and sell in a way that leaves you satisfied with the final outcome.
About the authors:
Bruce Oliver and Kial Jarred are from Xynergy Realty, a Melbourne-based real estate agency.