Auctions are very public events and as a result generally draw a lot of attention. The sight of a ‘for sale’ board on a property’s fence builds anticipation amongst the local community and prospective purchasers for weeks leading up to the big day. The energy on auction day is often palpable, with the crowd consisting of those that believe they’ve found their dream home, supporters of the vendor and a selection of the merely curious. On some Saturdays it seems as though there is an auction occurring on every street.
It will then surprise some to learn that approximately 75% of properties sold in Australia are done so privately. There are both pros and cons of each of these sale processes, so it’s important to take all of these considerations into account and make a decision based on which factors matter most to you.
Discretion: Private sales are more discreet, which for some vendors is critical, whereas auctions are quite public events. Furthermore, selling your house at auction is generally a more emotionally demanding experience, as the whole process is very much reliant on the outcome of one day, or more precisely, one hour. In contrast, when selling a property privately the vendor has more control over inspections and negotiations and can opt for a quicker or more drawn out process.
Immediacy: There are benefits to the immediate and pressurized nature of auctions though. Auctioneers produce a sense of urgency, which encourages prospective buyers to bid for fear of missing out. Likewise, the competition created by competing parties and encouraged by the auctioneer tends to raise the price, often well above the reserve. Private sales lack this sense of urgency and competition and negotiations are generally around convincing the vendor to lower the price, rather than competing parties pushing it up.
Cost: Private sales are typically more cost effective than auctions as they require less extensive marketing campaigns and auctions can require specialist auctioneers. However, this rule of thumb only applies only if the property is sold within the first few weeks that the property is on the market. If the property takes longer than four weeks to sell, the cost will end up equal or greater than running an auction marketing campaign.
Cool off period: Another thing to keep in mind when making the decision of selling privately or by auction is that private sales are often subject to a cooling off period, whereas when selling at auction a vendor can predetermine the selling terms.
While there are distinct benefits to both selling privately and going to auction, this decision should always be made on a case-by-case basis. Seeking the advice of professional can be invaluable in helping you make this important decision.
About the Author: Alex Flemm is a director at Hodges Caulfield, drawing on over 15 years industry experience and his entrepreneurial spirit to deliver value and results for clients. For more on Alex and his listings, please click here.