The Right Real Estate Agent Will Know
When you’re interviewing prospective real estate agents, always make sure you ask each one about which sales method they think would be most suitable to sell your property. Their answer should factor into your decision to appoint them as your sales agent, as it’s one of the most important decisions you can make – aside from choosing the right real estate agent, of course.
In choosing the right sales method for your property, a sales agent will take into considerations the current market conditions, the property itself and the market demand for properties like it, as well as your own individual circumstances as the vendor.
Private Treaty
A private treaty sale is the most dominant way to sell property in Australia, though it’s less common in areas where there is a high market demand for property, such as in the Lower North Shore in Sydney and Melbourne. Selling your home by private treaty involves publicly listing and advertising your property at a set price, reflective of the current market value. Buyers then make offers to your agent that you either accept, negotiate on or decline.
The pros of private treaty sales include:
- There is no pressure to accept an offer that doesn’t meet their needs
- Vendors can receive multiple offers from buyers and choose the best one
- The vendor has control over how long the property will stay on the market
- It’s suitable for regional areas where the demand for property isn’t as high as in major cities like Sydney.
The cons of private treaty sales include:
- Without a deadline, the process is sometimes drawn out as buyers wait to see if the vendor will drop their price or if something better will come along
- It can be difficult to set the right sale price – if it’s too high, the property could sit on the market for a long time.
Auction
Selling property by auction has become the dominant sales method in areas of Sydney, where there’s a high demand for property and a lot of buyer interest. Most auction campaigns run for between four and six weeks, culminating on auction day.
The pros of auctions include:
- In areas where there is high demand for the property, an auction is a fast and efficient way to sell your home for the best price
- Vendors are protected by a reserve price, which means the property won’t be sold unless it reaches the reserve
- Auctions for properties in high demand sometimes sell before auction when buyers feel there’ll be too much competition on auction day, speeding up the sales process further.
The cons of auctions include:
- If bidding doesn’t reach the reserve price and the property is passed in, it could send the message to buyers that the property has been overvalued
- Given the short timeframe, auction campaigns require significant advertising and marketing to generate the most buyer interests in the shortests space of time, which can be quite expensive
- If bidding is slow, this could also send the wrong message to buyers about the true value of the property.
Tender (Expressions of Interest)
Selling property by tender is becoming more popular among vendors wishing to sell their property discreetly. Selling by tender is basically like a silent auction, where the vendor receives confidential bids from buyers who don’t know if other buyers are bidding. This type of sale works best for properties that are unique and are in high demand; it’s a particularly common sales method for prestige properties.
The pros of selling by tender include:
- There is no publicly listed selling price, which puts vendors at an advantage when it comes to negotiations
- The vendor has more control of the sale timeframe, and at the price the property is sold
- Some buyers may make an offer that’s higher than expected.
The cons of selling by tender include:
- Because buyers don’t have any indication of the property’s true market value, it could result in bids that are lower than expected
- Some potential buyers may be turned off by the tender process, especially since the price is withheld
- Marketing and advertising costs can be expensive, particularly if initial interest is slower than expected.
Deciding which sales method is best for your property is something you should do in consultation with your sales agent. Always make sure that, when you’re appointing a sales agent to sell your property, you feel comfortable with the sales method they suggest.
For more information on selling your property, continue reading my blog, subscribe to get access to my Educational Videos for Buyers and Sellers or contact me for a confidential appraisal of your home.
—This article first appeared at the Selling Your Property website.
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