Different Ways to Sell Your Property
When selling your home, there are three main sales methods you can choose from. For you to achieve the highest sales price, it is important to talk to your LJ Hooker real estate agent about which method they believe is right for you and your property.
Certain areas and specific properties within an area will achieve better results when sold via private treaty vs auction and vice versa. So make sure you do your research and talk to your agent about the best method of sale for your property.
In this guide, we will detail and help you understand the different ways you can sell a property. To find out more about these methods and the relevant rules and regulations in your state and territory, read our specific state information articles.
Selling by Auction
An auction is a private sale held at a specific place, time and date following a marketing campaign over several weeks. A licensed real estate agent will conduct the auction, which is governed by strict rules and regulations. These differ in each state and territory, so you should always check what they are for your area.
By nature, an auction creates urgency. There is a definitive time when the buyer must act, or they risk missing the opportunity to buy the property. Setting an auction date groups all interested buyers together at the one time, creating a competitive environment and the best chance to achieve the highest possible price. The theory of an auction is that your home will sell at true market value at that particular time.
Unless the property is passed in and consequently becomes listed ‘for sale’, the seller knows exactly when a sale and settlement will occur. The benefit of this is being able to plan ahead with your next move.
During the marketing campaign, buyers are usually given a price guide which can vary throughout the campaign depending on the amount of interest in your property and feedback received from buyers. The great thing about auctioning your home is that there is no price limit. There is only a minimum amount that you are prepared to sell for, which you decide and is called the reserve price.
Setting the reserve should be an rational decision based on buyer feedback obtained by your agent during the campaign, as well as comparable sales in your area. By then, you should have a good idea of how many buyers are genuinely interested and how they feel about the price quoted to them.
The marketing undertaken for an auction property needs to be more focused and can often cost you more. A date is set and you need to create strong buyer interest in a short amount of time. Your LJ Hooker agent will recommend using a multi-faceted approach, whereby you advertise across several different mediums each week until auction day.
Once the hammer falls, the property is sold and there is generally no cooling-off period for the buyer or the seller. Buyers need to conduct building inspections and ensure their finance is approved before bidding at the auction. If the property fails to sell at auction, you can continue marketing the property with an asking price. It is likely that one of the buyers, often the highest bidder, will come forward and negotiate a sale with the agent on your behalf.
There is another auction term you may also hear - Private auction. These are held behind closed doors and only accessible to registered bidders, not the general public. This is often favoured by vendors with very expensive properties who value privacy.
Some of the benefits of selling your property by auction include:
- Auctions attract more buyers to your property because prospective buyers aren’t put off by an asking price.
- The auction date creates a sense of urgency that prevents buyers from delaying their decision and lets them know you are serious about selling.
- You are protected by a reserve price. This means your property won’t sell unless bidding reaches a pre-agreed level.
- There is no ceiling price, so you have the opportunity to achieve a price above your expectations.
- Auctions produce an unconditional contract for sale with a set settlement date.
Some of the cons of selling your property by auction include:
- There is no guarantee your property will sell successfully at auction. Reserve price is not always met.
- Potential buyers can be intimidated by the auction process and not bid.
- Auction marketing and advertising can be costly.
- Auctions don’t always offer you the best sale price, as the winning bidder only needs to bid marginally higher than their competitors.
- Auctions concentrate the buying process into a shorter period of time. This may turn out to not be the ideal time to sell.
Selling by Private Treaty
This is when the home owner sets the price tag to put on the property for sale. Your LJ Hooker real estate agent will then negotiate with each and every interested party, trying to find a willing buyer who will meet your nominated price or make an offer as close to it as possible.
It is important to ask your local LJ Hooker agent for guidance when establishing your asking price. They are experts in the local area and understand demographics, market trends and pricing value. They also know about comparable recent sales in your area. Having a clear understanding of your property's value will ensure you set a realistic price.
A sale by private treaty gives the seller greater control, more time to consider offers by prospective purchasers, and the ability to extend the time the property is listed on the market (although this often leads to potential purchasers wondering why the property is not selling). Plus purchasers must make offers on your property 'blind', without knowing what other buyers are willing to pay.
Generally, private treaty sellers can negotiate the price and sale terms with the buyer. Private treaty sales usually have a cooling-off period (5 days in NSW, 3 business days in Victoria, 5 days in QLD, 4 business days in NT, 2 business days in SA ). Once a price has been agreed between buyer and seller, the sale is still subject to conditions. For example, the buyer may have requested a building and pest inspection or may require finance approval.
Some of the benefits of selling your property by private treaty include:
- A fixed price makes it easy for buyers - they don't need to ‘guess’ your desired sale price.
- The price can be adjusted throughout the marketing stage, based on qualified buyer feedback and local market conditions.
- This method of sale is a tried and tested style of marketing.
- It assists buyers to formulate offers that address your desired selling price, which leads to a faster negotiation process.
Some of the cons of selling your property by private treaty include:
- Oftentimes, private treaty sales see the property sell underneath the asking price. While real estate agents account for this by allowing room for negotiation, getting the price list right from the onset requires careful consideration.
- Unlike an auction, there’s no sense of urgency with private treaty sales. There’s a risk your property will be on the market for a lengthy period, making it look stale to potential buyers.
- Buyers have the option of a cooling-off period during which they can withdraw the offer.
Sale by Expressions of Interest (EOI)
Sale by Expressions of Interest (EOI) is when you invite buyers to submit an offer to purchase your property by a specified time and date. Each potential purchaser puts forward their best and final offer (in writing).
Generally, your property will be on the market for 4-6 weeks. This will allow you to promote your property effectively while ensuring that buyers get ample time to look through the home, finalise their finance and determine the price they are willing to pay.
When submitting an expression of interest, the buyers need to include the price they are willing to pay, the conditions of sale, such as settlement dates, finance conditions, and inclusion and exclusions of the sale.
At the end of the sale period, the vendor will review submissions and choose the expression of interest that suits them the most. If the vendor doesn't find an acceptable offer, the property may be placed on the market as a private treaty sale or EOI’s may be called again.
If you are a buyer putting in an offer, remember that you may only have one chance to secure the property. Therefore, always try to put your best offer forward to ensure you’re not disappointed later on.
Expressions of Interest provide you with the benefits of a private treaty sale, but with the urgency of an auction without the potential stress.
Some of the benefits of selling your property by Expressions of Interest or Tender include:
- This method of sale shows you are confident about your property and a successful sale.
- Tenders offer the intensity of an auction but without the potential stress of an auction day.
- Tender enables you to keep the price you may accept for your property discreet and lets the market dictate the price buyers are prepared to pay.
- A tender has a closing date to create a sense of urgency in the buying process.
- This method of sale generates competition for your property.
Some of the cons of selling your property by Expressions of Interest or Tender include:
- Sometimes a sale by Expressions of Interest can be less effective than an auction at driving up the sales price since buyers are unaware of other offers.
- The sales process can be longer, especially if you don’t receive an acceptable offer.
- Some buyers may be deterred by the lack of formal sales price.
- Because an intense advertising campaign is needed for buyers to be aware of the closing date, the marketing costs can be higher.
How to sell different types of properties
Since there are so many options for selling a property, it can be overwhelming to choose the best one. Every property sale is different with its own unique advantages and disadvantages. There are certain situations that require some extra thought, depending on your current life event or personal circumstance.
How to sell a house after a divorce - Separation or divorce is an unfortunate situation that often requires selling a shared home and assets.
How to sell a unique home - Is your home unique in its size, layout, or location? Find out how to maximise your staging to showcase it in its best light.
How to sell your home in winter - Oftentimes the weather can impact a property’s ability to sell, especially in the cooler months.
How to sell a house with a mortgage - Even with a mortgage you can still sell a home and allow yourself the freedom to upgrade, downsize, or leave the market altogether.
Ready to sell your home? Request a free appraisal from your local LJ Hooker real estate agent today to get a better understanding of where your house stands in the current market today. It will also give you the opportunity to discuss what the best sales method is for you and your house.