When it comes to selling property, there are three popular selling options offered to vendors. These include; private treaty, tender or auction. While, there are no general rules regarding which selling option is best suited to what homes, there are a number of different pros and cons to each which can help you match your home to the correct selling option.
Selling by private treaty
A private treaty is generally the most popular mode of selling throughout WA. It involves an agreement for the sale of a property at a price negotiated directly between the vendor and purchaser, or their agents. The vendor - more often than not - sets the asking price before waiting for someone who is interested in making a purchase.
This asking price is not necessarily the minimum price the vendor will accept but it is a price they definitely will agree to. The actual selling price is determined after a period of negotiation where by the purchaser and vendor discuss back and forth until a price and associated terms are agreed upon.
· The private treaty process is less emotional and stressful than an auction – it doesn’t require immediate decisions.
· There is greater flexibility for negotiation - contracts can be signed “subject to” particular terms and conditions such as finance approval.
· Increased flexibility concerning the length of time your home is listed for sale. You are not working toward a specific date like you would be in the case of an auction.
· Potential cost savings on marketing expenses when compared to an auction campaign.
· Can potentially be a longer sale process than if you were to sell via auction.
· May need to make your home available for frequent inspections and viewings by potential buyers.
· If you or your real estate agent misjudge the market and misprice your property you may end up losing out on money if you value below market value, or if you price above market value, your property may sit on the market for months with little interest.
Selling by tender
A tender typically refers to a method of selling where by a property sells through the process of private and confidential offers made by a set deadline. Generally, a property on the market via a tender sale goes to the highest bidder.
· This method of sale usually says you are confident in the sale of your property.
· Tenders don’t have the potential stress of an auction.
· Tenders enable you to keep the price you may accept for your property discreet, allowing the market to dictate the price buyers are prepared to pay.
· A tender has a closing date to create a sense of urgency with buyers.
· This method of sale generates competition for your property.
· Marketing costs can be potentially higher as an intense campaign is necessary to make buyers aware of the closing date for the tenders.
· Due to a typically shorter campaign length, it is possible less potential buyers will view the property.
· Due to confidential bidding, other buyers will be unaware of offers made by competitors – leading to potentially lower bids.
Selling by auction
An auction is an open process where buyers bid against one another to purchase a property. It is soon becoming a very popular and effective way to sell, with more and more people around the state opting for this method.
To carry out an auction, your agent must provide an appropriate marketing campaign to assist in creating high profile and attract as many customers as possible come auction day. Furthermore, it is of great importance that your estate agent hold open houses prior to the auction to allow customers some time to evaluate and view your home.
· Auctions attract more buyers to your property as potential buyers are not turned off by an asking price.
· The auction date creates a sense of urgency that lets buyers know you are serious about selling.
· You are protected by a reserve price and there will be no ceiling price so you have the opportunity to achieve a price above your expectations.
· Auctions involve an unconditional contract for sale with a set settlement date.
· Some buyers don’t like the competitive nature and immediacy of the auction process and won’t even bid.
· Marketing campaigns for auctions can be quite intense which can be expensive for the vendor.
· Don’t always offer the vendor the best sale price – only the highest price offered.
· Bidding can be misinterpreted – if bidding is slow buyers may misunderstand the true value of the property.
If you are interested in learning more about what selling option is right for you, contact your local Peard Real Estate office for expert advice!