Selling Methods For Buyers
There are three basic methods of sale: Private Treaty, Auction or Tender. Each works a little differently to achieve a sale of a property. Below is an explanation of how each method works.
Private treaty has the most market acceptance. This is where a property is listed “For Sale” with most properties having a listed price which allows you to know what the owner is wanting for their property. You have the ability to decide what you would like to pay for the property and the option to negotiate with the owner to arrive at a figure that both parties are happy with.
Some private treaty properties are listed with a price plus the words “Offers over $........” or similar. It is up to you to decide what you think the property is worth and allows you to offer the owner what you think the market value of the property is. Normally, the “Offers over .$.....” range is roughly 10% over the dollar amount listed but if you don’t think the property is worth this amount you have the flexibility to offer what you feel is value for money in the current market.
Occasionally, private treaty properties are listed without a price eg. “For Negotiation”, “For Sale” and it is up to you again to decide what you think the property is worth
Auction: Selling without a Price:
Auctions are often used when a seller must be seen to achieve a fair market price to avoid the risk of being sued. Our law courts have determined that this is achieved when a property is auctioned. That is why we see deceased estates, marriage break-ups, court-ordered sales and trust situations usually being sold at auction.
The property being auctioned is usually advertised for 3 weeks and the auction takes place at a pre-set time on an allocated day in the 4th week. The auction can be either on-site or in-rooms.
At an auction, a property is sold “Under the Hammer” with No “Cooling-Off” period, No “ Building & Pest” & “Finance” clauses . It is up to you to do your inspections prior to purchasing the property and have your finance approved in advance. Usually a 5% or 10% deposit is required at the time of signing of the contract which takes place immediately following the auction.
The Auction process is transparent as all the bidding is done in view of everyone at the auction. The Office of Fair Trading also has strict guidelines regarding bidding and now require that all buyers are registered and given a number before they are able to bid at the auction to improve transparency and eliminate “dummy bidding”.
In a sale by tender, buyers submit their offers into a locked tender box by a pre-set deadline. Tenders are not used very much and are not understood by the general public. Their main use is in the sale of development sites, large commercial and industrial properties where there is likely to be adequate buyers and transparency is critical.
Source: Sell for More: Gil Davis