When you sell your home there are two main methods of sale that are commonly used. These are either sale by Private Treaty - also known as a set price, or by Auction. Let's take a look at the differences between these two methods and what you can expect from each one.
Private Treaty
When your home is listed as private treaty, an appropriate sale price is set and advertised to the public. If your preference is to sell your property by private treaty, New Wave Property can help you set a sale price that is based on recent sales of similar properties in your area. We will also take into account movements in the market as well as current buyer activity and demand. It is important to set a realistic price, as buyers may not even come to look at the property if they feel the price is too high. They may also be reluctant to make an offer as most people don’t wish to offend the home owners if their offer is too far from the asking price.
Statistics show that most buyers will notice a new listing within the first week or two that it is advertised, and drops quite dramatically in the weeks that follow. Therefor it is vitally important to price your property correctly in order to attract buyer interest in the first few weeks. If it is priced correctly, often we can generate interest from multiple buyers. When we do this, it can create a sense of competition between the buyers and in some cases, achieve more than the asking price.
In a strong market, it is quite common to list the home for marginally above what you would like to sell the property for. This gives a little more room for negotiating. If the interest is dropping on the property after three or four weeks it may be time to consider adjusting the price or update some of the marketing material.
Selling by private treaty also offers positive aspects for some vendors who value their
privacy, or who are not in a hurry to sell and would prefer to take some time to consider any offers made from prospective buyers.
One disadvantage to selling by private treaty is that the buyer may take a few weeks to complete their building and pest inspections, receive their letter of loan offer from the bank and sign the contracts to exchange - or go unconditional - on the property. Once the contract has been exchanged then the sale is locked in, but unfortunately up until that point the prospective buyer can change their mind at any time. This doesn’t happen all that often but it can indeed happen.
At New Wave Property, we always actively ‘manage’ our buyers, spending a lot of time guiding them through all the steps they need to take prior to exchange, to ensure the process is moving forward smoothly and without disruption.
Public Auction
If you decide to sell by Auction, your home will be taken to market without a set price. Instead, prospective buyers are invited to inspect the home over a period agreed upon. This is usually a four week campaign with the Auction being held on the fourth week (this can change depending on market conditions).
Because of this limited timeframe and the atmosphere of auction day, marketing your property by auction can create a sense of urgency and set the buyers in direct competition with one another. This very often results in a higher sale price being achieved. While buyers will typically only pay what they want to pay for a property, the pressure of a competitive auction can often see a buyer stretch a little over what they expected to spend on the day.
As the owner you have much more control; you will choose the Auction date and time that suits you, the terms of the contract and the settlement date. Auctions are usually held on site but can now be also conducted very successfully online through virtual platforms, making it much easier for buyers (and sellers) who can’t travel.
We have systems in place to make sure all prospective buyers have completed all their checks
prior to the Auction e.g. having building and pest inspections conducted, engaging their solicitor in regards to the contract and most importantly, confidence in their ability to fund their purchase. Buyers at auction need to be registered, so all of their details are recorded, as required by law and we ensure that they have a clear understanding of the conditions and obligations that will apply, should they be successful in purchasing the property.
Throughout the marketing campaign we will keep you regularly informed and updated.
Before auction day we will sit down with you and, using all of the buyer feedback and latest market information, we will help you set a reserve price that you are comfortable with. Our market knowledge and experience will guide you to an achievable figure but ultimately, it is your decision. The reserve price is confidential and will be handed to the Auctioneer just before the auction begins. You will be protected by the reserve price. If the bidding does not reach this price then you do not have to sell, unless you choose to adjust your reserve on the day to make a sale possible.
What we are looking for is a strong marketing campaign generating a lot of buyer interest and a busy auction day with spirited bidding that reaches above the reserve price. The successful buyer will be required to sign an unconditional contract with no cooling off period. This is a
binding, exchanged contract and an agreed, non-refundable deposit of 5% -10% will be placed into a trust account on your behalf.
This definitive sale is all achieved within a time frame of 3-4 weeks. If, as can sometimes happen, the property does not sell on auction day, then we may choose to place a price on the home and continue to market under the private treaty method. It is important to remember that not selling on auction day does not mean failure. We will have held an intensive marketing campaign that has attracted a lot of buyer interest in a short period. Quite often, buyers who are reluctant to bid at auction come forward soon afterwards to negotiate and in many cases, properties are successfully sold soon after being "passed in" at auction.
Which method is right for you?
Both methods work very well for different reasons and either one may be the better
choice, depending on the particular property and your personal circumstances. At New Wave Property, we would be more than happy to sit down with you and discuss further which method would be best for you and your property.