So you’ve decided to sell, but there’s one more major decision to make: should you sell via an auction, or a private sale?
Each has unique benefits and costs associated with them, which are important to fully understand before making a decision. So, what are the differences between an auction and a private sale?
What is involved in an auction?
Potential buyers will register to participate in the auction, where they will publicly compete to purchase a property by placing bids. Auctions are held on a set date and time, with inspections being held in the lead up. This creates a sense of urgency and competition amongst buyers.
The highest bidder at the end of the auction is typically required to sign a contract of sale and pay a deposit immediately after the auction. The contract is legally binding, and the sale is considered to be unconditional.
It’s important to note that all properties have a reserve price, which is the minimum price the seller is willing to accept. If bidding does not reach the reserve price, the property may be passed in, and negotiations may continue between the highest bidder and the seller to try and reach an agreement. In addition, just because you choose to go to auction, doesn’t mean you won’t sell beforehand. Prospective buyers can submit offers for consideration at any time.
Auctions are a fast-paced and exciting way to sell a property and can often achieve a higher price than a private sale. However, they may not be suitable for everyone. Some people may feel uncomfortable with the public nature of an auction. It can be intimidating to have all your neighbours and anyone in attendance watching negotiations take place. Additionally, some people may feel pressured to make a quick decision on whether to accept an offer. It’s worth noting that auctions also have the added cost of an auctioneer, which generally ranges from $500-$600.
What is involved in a private sale?
In a private sale, the property is listed on the market, and potential buyers can make offers directly to the real estate agent. You will then be free to negotiate with potential buyers until they find an offer that they are happy with.
One of the benefits of a private sale is that it can be a more flexible process than an auction. You can choose whether to accept offers, counter, or reject them outright, and you have more control over the negotiation process. You can also entertain, negotiate, and consider more than one offer at once.
Unlike an auction, there is no set deadline for a private sale, so negotiations may take longer. However, this can also give you more time to consider offers and make an informed decision.
Once you and the buyer have agreed on a price, the next step is to sign a contract of sale, which is typically prepared by the seller’s conveyancer or solicitor. The contract will outline the terms of the sale, including the price, settlement date, and any conditions that need to be met.
In a private sale, the sale is generally not considered to be unconditional until the contracts have been exchanged, the cooling-off period has ended and the buyer has paid their full deposit.
It’s worth noting that while a private sale may be a more relaxed process than an auction, there are still important legal and financial considerations to take into account. It’s essential to seek advice from your real estate agent, solicitor or conveyancer before entering into a private sale.
What does it all cost?
It’s important to note that whether you choose an Auction or a Private Sales there will be marketing costs in addition to the agent’s commission in the case of a successful sale
Marketing costs can add up quickly. These can include the cost of photography, drone footage, video, floor plans, and advertising copy. As the property owner you can choose what you would like in your marketing programme but be prepared for this additional cost when considering the sale of your property
Where to now?
When deciding between auction or private sale, it’s important to consider your personal preferences and circumstances. If you are comfortable with the public nature of an auction and want to achieve a quick sale, it may be the right option for you. If you prefer a more private negotiation and want to consider multiple offers, a private sale may be more suitable.
At Prudential Real Estate, our experienced agents can help you navigate the auction and private treaty/sale process to help you achieve the best outcome for your property sale.
Information referred to in this article was obtained from publicly accessible sources including OpenAgent. The information provided in this blog post is for general guidance only and should not be taken as personal advice.
Prudential Real Estate Campbelltown | (02) 4628 0033 | campbelltown@prudential.com.au
Prudential Real Estate Liverpool | (02) 9822 5999 | liverpool@prudential.com.au
Prudential Real Estate Macquarie Fields | (02) 9605 5333 | macquariefields@prudential.com.au
Prudential Real Estate Narellan | (02) 4624 4400 | narellan@prudential.com.au
