When it comes to the sale of your property, there are more options available to you when choosing a method of sale than simply listing your property for a fixed price. In fact, according to the latest Harcourts figures, the number of auctions being performed around the country is up massively from last year.
So, why are people choosing to sell their homes in this way, and what are the alternatives?
We’ve all read the media commentary about rising house prices, and although there are many theories as to why this is, what it really comes down to are two factors – low supply and high demand.
Auction is the best way of achieving a premium price in a competitive market. Auction involves a short, sharp and intensive marketing campaign of a property without a price. This is to test the market to see what buyers, in a competitive situation, are prepared to pay to become the new owners of that property.
Marketing with a price limits what a keen buyer may pay. Once a listing price has been established for a property, a ceiling has been placed on what a buyer expects to pay for it. Auction, on the other hand, offers a real opportunity to get more for a property than the seller might expect.
What happens if I have chosen to auction my property, and I get an offer before the auction date?
If you wish to accept the pre-auction offer then Harcourts will recommend that you bring forward the auction and contact the other interested parties. The earlier auction can then be held with the acceptable offer as the opening bid. That way if any buyer is prepared to pay more Harcourts can obtain that premium for you.
Price by Negotiation (PBN)
This method of sale can be applied in any of these three ways:
1. No price is advertised. Buyers make offers through the sales consultants.
2. A minimum price may be advertised. Offers above this minimum price are considered by the seller.
3. A price range may be advertised. Offers within this price band are considered.
The benefit of PBN is the level of market interest will help the seller gauge a fair sale price. The ‘no price’ aspect will also attract more genuinely interested, cash-in-hand buyers as well as ensuring the sales price isn’t capped. In contrast, unlike auction and tender there is no sale date or deadline in place so there is no urgency placed on buyers to make a buying decision.
Another benefit of PBN is that this method creates competition between buyers, and this gives the seller the opportunity for stronger negotiating with potential buyers.
This means that a property is listed with a definite price. If the property is priced correctly it will attract a lot of interest, and in some cases have multiple offers resulting in a premium sale price. The fixed price also gives the buyer a price guideline and allows for a property search by price on real estate websites.
However it is easy to over or under price the property and buyers may discount the property without inspecting it, judging it solely on the price. This can effectively limit the market for that property.
Tender works in a similar way to the auction system, except there is no public auction day. Instead, tenders or offers close at a specific time on a specific date.
Tender presents another opportunity for sellers to create a competitive situation without stating a listing price. They set the terms, conditions and the deadline, and prospective buyers have only one opportunity to put forward their most competitive offer.
The seller doesn’t necessarily have to accept the highest price. They can choose to negotiate with any of the tenderers to achieve a satisfactory conclusion.
So, when you’re considering how to sell your property, take the time to work out which method suits you and your circumstances before making a decision, also take the time to discuss the best options for your property with your real estate agent. As property experts, Harcourts can help to advise you on the method of sale that’s going to work well for your property.