Weighing the pros and cons of different methods of sale

Stu Benson, Director and Auctioneer at Benson Auctions and Domain’s Corporate Sales Manager, has spent the last 15 years within the real estate industry. With his experience and close links with the market, including a stint as auctioneer in last season’s The Block Triple Threat, Stu gives us his take on different methods of sale to achieve the best outcome.

Going-to-Auction

When it comes to selling a property there’s more than one approach you can take. Yet no matter whether it’s a sale by auction or private treaty, or one conducted in person or online, you’ve got to be across all of the possibilities to be an effective agent. Sure there are some agents out there who only sell one way, and who make a killing doing it. Most, however, need to have more than one trick up their sleeve to meet an array of client needs and preferences.

In this post, I outline the pros and cons of each method of sale. Ultimately, you as the agent need to shape your recommendation to your client based on the individual property, the local market and your vendors’ preferences; however, this succinct list of pros and cons may help you support the recommendation you put forward.

Sale by private treaty

The most popular way to sell a home in Australia is by far through private treaty. When sold by private treaty, properties are put on the market at a defined price or price range and supported with a marketing campaign and a series of open homes. In some markets, a sale by private treaty can be reached in a matter of days or even hours, while in others it can drag out over the course of many months.

Pros: The big advantage of sale by private treaty is the fact that having a defined price associated with the property effectively helps to pre-qualify potential buyers. While you may get less interest in a property as a result, chances are that those who do see the property have the means of actually purchasing it.

Cons: Agents often have to have tough conversations with their vendors when a property doesn’t attract buyers at the price point the vendor thinks it should. Plus, if a vendor is reluctant to follow an agent’s advice regarding how to appropriately price a home, it could easily linger on the market much longer than anyone would like.

Sale by auction

An increasingly popular way to sell property is by auction. In fast-paced markets like Sydney and Melbourne, it’s how approximately 30% of properties currently trade hands. That’s because in competitive markets like these, auctions are an effective way of reaching the true value of a home by bringing potential buyers together in a competitive bidding environment. But don’t make the mistake of thinking auctions only work in the major cities. They’re also rapidly taking off across the country.

domain_quote9Prior to most auctions there’s typically a 28-day campaign to raise interest in a given property. Given the finite period of these campaigns, they often include higher impact marketing (bigger print and online ads) and more frequent open homes. Throughout the campaign, getting feedback is critical. Agents should actively solicit potential buyers’ feedback on how the property compares to others they’ve seen. Those insights will help the agent to set the right reserve.

When auction day rolls around, you’re hoping for a lot of interested buyers to show up, who will compete with each other to push the final sales price of the home to what’s the market deems is a fair and reasonable value at that particular point in time.

Pros: Among the advantages of a sale by auction is that it doesn’t automatically shut out potential buyers in the same way that having a set sales price can. If a buyer’s budget is $950,000, chances are that they won’t even consider a property listed at $1 million. With an auction, however, there are no list prices. As a result, more potential buyers often wind up walking through the property, some of whom could fall in love with it and figure out a way to come up with the extra money.

Cons: Whilst I’m a huge advocate of running every auction to its eventual auction date, be prepared to possibly lose some buyers along the way. Some potential buyers who are interested in a listing from day one may not want to wait for various reasons. They could wind up purchasing another property before yours gets to auction.

Curious what homes have been selling for in recently?  Take a look at our local area here.

 

thanks domain.com.au