Property: choosing your sale method
30 May 2017
Auction, by negotiation, tender... there are various ways to sell your property. Real estate agency Harcourts explains the main methods and the reasons they may work best for you.
Auction is the best way of achieving a premium price in a competitive market - which has been the case in various hot spots around the country recently. Auction involves a short, sharp and intensive marketing campaign of a property without a price. This shows what buyers, in a competitive situation, are prepared to pay to become the new owners of that property.
Marketing with a price limits what a keen buyer may pay, by placing a ceiling on the price. Auction, on the other hand, offers a real opportunity to get more for a property than the seller might expect.
As a seller, you may receive pre-auction offers from prospective buyers. If you wish to accept the pre-auction offer, your Harcourts sales consultant will probably recommend bringing forward the auction and will contact any other interested parties. The new auction can then be held with the offer price as the opening bid. That way if any buyer is prepared to pay more, you won’t miss out on getting the best possible price.
Tender works in a similar way to the auction system, except there is no public auction day. Instead, tenders or offers close at a specific time on a specific date.
Tender presents another opportunity for sellers to create a competitive situation without stating a listing price. They set the terms, conditions and the deadline, and prospective buyers have only one opportunity to put forward their most competitive offer.
The seller doesn’t necessarily have to accept the highest price. They can choose to negotiate with any of the potential buyers to achieve a satisfactory conclusion.
Price by negotiation (PBN)
This method of sale can be applied in three ways:
1. No price is advertised. Buyers make offers through the real estate sales consultants.
2. A minimum price may be advertised. Offers above this minimum price are considered by the seller.
3. A price range may be advertised. Offers within this price band are considered.
The benefit of PBN is the level of market interest will help the seller gauge a fair sale price. The “no price” aspect will also attract more genuinely interested, cash-in-hand buyers. By contrast, unlike auction and tender there is no sale date or deadline in place so there is no urgency placed on buyers to make a buying decision.
This means that a property is listed with a definite price. If the property is priced correctly it will attract a lot of interest, and in some cases have multiple offers. leading to a premium sale price. A fixed price also gives buyers a price guideline and allows for a property search by price on real estate websites.
However, it is easy to over- or under-price the property and buyers may discount the property without inspecting it, judging it solely on the price. This can effectively limit the market for that property.
See the Harcourts website for more information about buying and selling property.