A question we’re often asked is whether to sell a home by holding an auction or by private sale…. Well it depends!

Some argue the economical process of auctions are the best way to get the most competitive price, however others argue a private sale is better as there is room for negotiation.

There are many factors to consider, such as the type of property and whether you want a quick sale. What is important though, is you understand how each type of sale work and the pros and cons of each method.

A private sale

Officially known as a private treaty, this is when a buyer makes an offer to the seller. The offer is either refused, accepted or there are further negotiations on the price. When the price is agreed, a contract is written and signed.

There is usually a cooling off period, usually a few days, for either party to pull out of the agreement. Once the cooling off period has passed, the contract is legally binding and the sale must go through.

• Pros

– the process is appealing to many buyers

– the slower process potentially allows for wider reach of interested parties

– there is more time for the seller to think about the offer

– the buyer can hold out for higher offers

– there is greater flexibility with contract clauses during the negotiation period

• Cons

– there is a danger the buyer may pull out in the cooling off period

– you may need to make your house available for viewing at inconvenient times

– there is less urgency pushing up the property price

Selling by auction

In its simplistic form, this involves one event where the potential buyers come together and bid on your property. Obviously, the person who bids the highest is the successful buyer, but only if this matches or exceeds the reserve price.

The reserve price of your home is set by you, and can be adjusted on the day of the auction. When setting the reserve price, be realistic. It’s also worth noting that once bidding reaches the reserve price, then legally you must accept the price, even if the highest bid is only $1 over your set reserve.

If the bidding does not meet your reserve, the property is what is known as ‘passed in’ – ie, it won’t sell at that auction. If this happens, you can still sell it at a later date.

• Pros

– it’s a quick method of sale and settlement is usually completed within a month

– the competition between bidders can drive up prices

– the process offers three opportunities of sale: prior to auction, auction day or, if the property is passed in, through negotiation

– you choose the reserve price.

• Cons

– auctions do put many buyers off

– if expectations are too high and the property is ‘passed in’, there is a danger of losing prospective buyers

– although auctions are generally straightforward, they do have strict laws, so use a reputable agent to ensure you are operating within the law

– requires heavy marketing in the run up to the auction date

A good agent knows what the market is currently dictating and can advise which method of sale will probably work best for your property.

We do more than sell and manage property; we also love sharing our knowledge with you so you can make informed decisions. We believe we go above and beyond expectations which is why we are one of Newcastle’s longest established real estate companies. Give us a call on 02 4954 8833 or pop into our Cardiff office for a no-obligation chat. Alternatively, send us an email to: mail@apnewcastle.com.au – we’d love to hear from you.

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