Knowing whether an auction or private sale is the best way to sell your home depends on a number of factors. While your agent will be able to recommend the best way to sell your home, it helps to understand what’s involved and why they might recommend either option.
Selling your home at auction can help generate a sense of urgency and competition among buyers which can make them more competitive during bidding. That competition can help increase the sale price for you. An auction also provides you with protection through a reserve price which means your property will not sell unless bidders reach a pre-agreed level. In addition to the reserve price, there are also set terms which include the settlement terms.
There may be additional costs involved to sell at auction which cover the cost of marketing your property and hiring an auctioneer. It’s important to discuss these costs with your agent. Selling through auction can also limit the potential number of buyers that your property appeals to as some buyers prefer to make offers privately.
Suitable if you don’t need to sell urgently, private sales or treaties can be less intimidating and overwhelming than an auction for both sellers and buyers. You’ll also have more time to consider offers made by potential buyers and buyers have more time to make those offers. Private sales are also more flexible, allowing you to offer different sales terms and extended settlement periods. They can also be less expensive than an auction as marketing campaigns are usually less expensive. Private sales also allow you to keep the specific details of the sale out of the public eye.
Private sales are usually subject to a cooling off period which differs in each state and territory across the country. This period gives the buyer time to change their mind, even after contracts have been signed. The sales length can also be longer than an auction because there’s no specific end date to give potential buyers. Where at an auction the bids increase thanks to buyer competition, private sales allow buyers to negotiate the price down.
While there are benefits and limitations to both auctions and private sales, the best strategy to sell your home should be discussed with your agent.