Methods of Sale
When it comes to selling property, emotion rules! Establishing exactly what you want, and why, from the very beginning will assist you to choose the best method of sale for you. So what do you really want?
There are three things that remain consistent when it comes to deciding to sell. They are:
- PRICE - best/premium price.
- URGENCY - a quick sale.
- PRIVACY - as little inconvenience and publicity as possible.
Ranking these three things in order of importance will help you, and your agent, establish the best marketing campaign, and method of sale for your situation.
Ray White’s experience confirms the two most successful, and popular, methods of sale are private treaty (for sale) and auction. In fact, both can, and do, yield excellent results when accompanied by the right marketing campaign and skillful negotiation by the agent.
You should choose the method best suited to your personal requirements. Also, look at the types of buyers in your area. Ask your agent to compare the success of each method. There is likely to be a trend for one of them, which may help you achieve greater success.
Your property goes onto the market with a predetermined asking price agreed between you and your agent, based on market analysis. In most cases and markets, this price, or a guide to it, is publicly stated. In some others it is not.
There is no official sale date. Your marketing strategy may vary in the use of some, or all of the tools at your disposal, depending on your individual situation, budget and time frame. In some cases you may wish to utilise the agent's buyer database only, and rely on the negotiation skills of the agent. In more competitive markets, you may require a more targeted promotional strategy.
Your agent may still recommend inspections through regular ‘open homes’, and will discuss the options for your marketing strategy to spotlight your property in the marketplace.
Potential buyers will either accept the predetermined price or, more likely, start by making a lower offer. Your agent will handle the negotiations, which will be aimed at raising the offered amount to your predetermined price, or possibly higher if more than one buyer is interested.
This method of sale is effective in the long term, and targets buyers who want to visit properties in a specific price range. It allows you, the seller, to assess market interest in a calm atmosphere, and make any adjustments to your campaign and sale price that seem appropriate.
It is attractive to those buyers who feel they are more likely to succeed in getting the property at a better price rather than bidding in the competitive atmosphere of an auction, where they could also risk spending more than they’d intended.
Some considerations of this method include:
The predetermined price will generally turn out to be the maximum paid, or the basis of lower offers.
The open ended time frame can result in the property being on the market for a longer time, increasing advertising costs. Note: if your property is on the market for a long time and has several price reductions, it may give buyers the idea there is something about it that makes it hard to sell, which is why a good promotional campaign can be very important.
Auctions are highly focused marketing campaigns designed to expose your property to the maximum number of buyers, maximise your sale price, and minimise the number of days your property is on the market.
Your property is put up for sale on a specified date, and this is preceded by a high impact marketing campaign and selected ‘open days’, all of which indicate your commitment to selling.
The contract of sale is on your terms, and the conditions of the sale are predetermined to suit your situation. The nature of the marketing campaign means that the agent will be able to give you regular feedback from buyers in the market, which will assist you in setting the reserve price.
The impending auction date can create a sense of urgency and ‘call to action’ amongst buyers. You are not obliged to accept an offer that does not reach your reserve price. You can, however, decide to negotiate with the highest bidder(s).
Auctions offer extra opportunities for the sale of your home because an offer can be made before, at, or after the auction. Once a sale is made, either by accepting an offer in writing before auction day, or at the fall of the hammer on the day itself, the buyer must pay a 10% deposit then-and-there, and at the same time execute the contract.
This method of sale puts a clear time frame on your campaign, and creates a competitive atmosphere on auction day that is aimed at letting the market determine the highest price for your home.
Some considerations of this method include:
The chance that some potential buyers will be excluded, in particular those who don’t want to risk losing money on the cost of building, pest and other inspections if they are outbid. (Not applicable in the ACT)
Some buyers may not feel comfortable with the competitive bidding involved in auction. Auction attracts serious buyers as they know the owners are serious about selling.
By marketing without a price, buyers can judge the property on its merits, rather than on how the price compares to other properties on the market.