Auction vs private sale, which is right for you?
Both methods have pros and cons and according to one expert, the decision about which one to choose should take into account a variety of factors, such as the location of the property, its type and style and the level of interest and timing.
Private sale or go to auction? Both methods have pros and cons.
An auction is a sale held at a certain place, time and date, after a marketing campaign. A licensed real estate agent runs the auction and sells once a reserve price is reached.
Auctions are governed by strict rules and regulations, which are different in each state and territory. They create competition and are a transparent process for all parties.
Auctions can be emotional, so they inspire urgency and competition. That competitive nature can get bidders really determined and fired up. All of this tends to drive the price up.
At auction, vendors also have the protection of a reserve price – the lowest amount they’re willing to sell for. There’s also the possibility of selling for more than the reserve.
Because an auction happens in the open, vendors can be confident they “got the best they could” for the property.
The biggest negative is that public nature of auctions.
Some people simply aren’t comfortable with having an auction, with people coming through their homes and having an auction out the front that’s open to the public. In this case, it’s possible to have a private auction, with only invited bidders.
A private sale is when a property is listed for sale through an agent, with an asking price attached. The property is marketed and potential buyers make offers to the agent, who presents them to the seller, who decides whether to accept or not.
A private sale can be less stressful for some sellers. Private sales are ideal for properties in areas experiencing less demand and where comparable sales data can ensure the vendor the price they set is right.
Your home needs to be in demand in some way for an auction to be successful. The whole point of the auction is to inspire competition between buyers, so there’s no point going to auction if the demand just isn’t there.
This method of selling also offers great privacy, if that’s a concern. Not everyone is comfortable with having the sale price of their property be public knowledge. The private sale process can also be less costly than an auction. With a private sale, there is also a cooling off period, which gives the buyer time to change their mind.
The decision about which method to go with should be made by the vendor and agent, in collaboration.
Ultimately, it’s a personal decision and you have to do what you feel comfortable with.