There are three basic methods of sale: private treaty, auction or tender. The correct choice depends on your property and the current market.
Private treaty has the most market acceptance. Every buyer likes to know the asking price and have the opportunity to negotiate, while you have the ability to bargain which can allow you to get a little more than expected. I will do a comparative market analysis of properties that are similar to yours, in close vicinity of your property that have sold during the last 6 months to allow me to determine what price you are likely to expect for your property. I will give you a realistic figure rather than “a pie in the sky” or overquoted figure. The market will soon tell you if the price is right. If the pricing is correct, buyers will want to put an offer on the property. Private treaty sales tend to be relatively simple as genuine buyers readily identify with the property as being suitable.
If the asking price is not set correctly and it is too high you will find you won’t have any buyers or offers. You will not attract the right buyers and it could also lead to you helping your competition to sell as buyers see these homes as better value for money. Buyers are usually well informed and are able to do research quickly using the internet. They can also buy information easily and most are very savvy and aware of what property is on the market so will not to purchase or inspect your property if they think the price is too high.
If you list your property with an unrealistic price it can be detrimental to your property. The longer your property is on the market the more it will give the impression to buyers that something is “wrong” with the property. Most buyers when they inspect your property will ask “How long has it been on the Market?” & “What Price are They Looking For?”.
If there is no genuine interest you need to look at the three factors that influence a sale – called the 3 P’s – Presentation, Promotion & Price. Is the property presented properly? Have we done enough marketing? Is the price right?
Selling without a Price: Auctions reply upon competition for success. They are best used in a strong market and especially when prices are rising. 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.
Auctions are also very successful when a property is in a highly sought-after location or has the physical attributes that many people are wanting.
The obvious benefit of an auction comes in a competitive bidding situation when a combination of buyer emotion and testosterone can drive the price up far beyond expectations.
Properties are marketed without a price and run in conjunction with a strong marketing/advertising campaign. The property usually is 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.
One of the main advantages of selling at auction is when your property is sold under the hammer there is no “cooling off” period, no building & pest or finance conditions. The property has been sold!
The process of Auction is also 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, 2008