In Australia there are four main ways of selling a property. They are private treaty, auction, tender and expression of interest. The two most common are private treaty and auction with private treaty being the most popular. Both formats require similar investments in marketing and agent fees. To choose which format best suits your property for it to sell for maximum price and in good time, you need to consider the following factors:
- Your type of property
- The demand for your property
- Your pricing expectations
- Your selling timeframe
- Just like everything else, each format has its pros and cons – or call them cautionary attachments. The list below may assist you in deciding which format to go with.
In a private treaty sale, you set the price or price guide and wait for someone to buy. Here are the pros and some cautionary advice on using this option:
- Most buyers opt for this type of format.
- Only one interested buyer is needed to get the price you want.
- You set the final sale price.
- The negotiation process allows both sides more time to consider terms and conditions.
- Terms and conditions are flexible hence both can achieve a win-win situation.
- You can accept a higher offer if it comes in before signing the contract of sale.
- There is confidentiality on offers, so competing buyers will bid high for fear of missing out.
- The initial pricing might be wrong.
- Excellent negotiation skills are required from both the seller and the agent hired.
- Marketing and negotiations are critical.
- The property should be fully ready for sale before stepping into the market.
At an auction, potential buyers bid competitively for your property at a nominated time and the highest bidder wins. Here are the pros and some cautionary advice on using this option:
- Auction works well for unique homes that are difficult to price.
- Auctions can create urgency for buyers to act.
- The bidding process is transparent, and competition drives the price up.
- You set the auction date, reserve price, settlement date, and other terms and conditions.
- Your reserve is not disclosed.
- The sale is not subject to valuation, finance, or inspections.
- You can sell the property before, during or after the auction process.
- You must aim your home to the correct market to make a sale.
- A skilled auctioneer is a must and comes at a fee.
- The sale price is determined by the market and this can go either way, high or low, depending on the demand.
- A sale is not guaranteed. Statistics show that 60% of auctions do not end in sales.
- It is not an option for most buyers because the sale is unconditional and there is no cooling-off period.
- There is no room for negotiations.
- Time – an auction campaign lasts at least four weeks.
- There is a risk of weakening your future negotiating position if your property is passed in at auction.
If you are still unsure which format to use in selling your property, your agent is the ideal person to guide you in your decision making, particularly if they have a strong track record of selling properties just like yours. Have them provide evidence of their success using the sale format they recommend for your home.
EXCLUSIVE AGENT OR OPEN AGENT LISTING?
This usually depends on which format of sale you decide on. For auctions, an exclusive agent is the one who usually manages the sale. For a private treaty sale, there is also the option of listing with different real estate agencies, also known as open agent listing.
However, it is advisable to choose an exclusive agent to represent you, rather than list your home with multiple agents. The reasons for this are:
- You save money in your marketing, as you will not be using numerous agents.
- Your agent will be more invested in selling your property if they have the exclusive right to do so than they would be if multiple agents were competing for the sale.
- Your marketing message remains consistent since there is only one agent to deal with.
It is vital to get an exceptional real estate agent who will insist on exclusivity, so they can effectively manage the marketing of your home, protect your sale price and sell your property in good time. You can have an exclusive agency agreement that grants your agent up to 90 days to find you a buyer. If they fail to do so in this time, you can either renew the agreement – depending on their performance – or list your home elsewhere if you are not satisfied with their services.