It’s time to sell your house, but which direction do you go in? Both an auction and private sale have the capability to give you a great selling price on your house, but it is vital to have a plan.
An auction is based around a date. Once you have set this date, you work towards making a sale on or near that point in time. Although the asking price is usually not displayed, some people may like to give a hint of the minimum amount that would be acceptable. The main purpose of an auction is to get buyers interested, bring them together in the hope that they will bid against each other and drive up the purchase price.
Auctions have several benefits. Firstly, it creates a sense of competition between buyers. People are more likely to make higher offers if they are fighting for the property; compared to if they were just making an individual offer. The price is also negotiated upwards from a slow starting point. This means that there is no limit and sellers may receive a higher purchase price than with a private sale. A booming property market often creates more competition between buyers which can result in people bidding emotionally rather than strategically and can drive up the price even more.
There is an expectation that the property will be sold on the day of the auction, so it creates a sense of urgency for people who would really like to buy it. Also, on or near the auction no cooling off period applies. Unless previous arrangements have been made, the buyer will have to accept the contract.
However, there are some pitfalls. If the market is quiet, less people may turn up to the auction, which may create a negative impact on the prospective purchasers’ willingness to pay a good price. As prospective buyers are unable to change conditions in the contract or have a cooling off period if they buy at an auction, it may stop them from wanting to buy.
A private sale is often the more popular choice as it suits more buyers. Prospective buyers may need certain conditions to suit their needs and they cannot always have these conditions met through an auction. It is also less intimidating for buyers as they are able to deal with the vendor individually and not have to compete with each other directly.
Unlike an auction, the asking price is often the limit and sellers usually have to settle for a price lower than what they asked for. Also, a private sale can drag on for a long time. Even if you set a target date for the sale, if the property market is quiet it may affect how quickly you can sell your house.
Everyone’s situation is different, so what might work for one person, may not work for another. You may have sold your previous house through private sale and swear it is the best option, but it is worth analysing the market and speaking with a real estate agent in conjunction with a non-bank finance or mortgage company for completely impartial property advice and guidance.