When selling a property, you have to make a lot of decisions, but one of the most important ones is about the method of sale; auction or private sale?
Often depicted on reality TV, auctions are a competitive, public process that can help drive up the selling price, while private sale is the more traditional, popular method. It’s where a property is listed with an asking price through an agent, who then markets the property and presents offers back to the seller.
An auction, held at a certain place, time and date after a marketing campaign, is a competitive and transparent selling method.
Auctions are governed by strict rules and regulations, which can differ between states and territories. But in essence, a licensed real estate agent runs the auction, onsite or in an office, and sells the property once a reserve price – the lowest amount the vendor will sell for – is reached.
Labiris says auctions are a popular method of sale, especially in Melbourne and Sydney. And they have many benefits, he says.
As they can be emotional affairs, auctions create urgency and competition among buyers, driving the price up, which is good news for the seller. They’re especially suited to properties that are in high demand or unique or will appeal to multiple groups of buyers, as it creates a contest. Also, there’s no cooling-off period.
With a public auction sellers can go away safe in the knowledge they got the best possible price for their property. Not everyone likes the public nature of auctions though. In that case, it’s possible to have a private auction, with only invited bidders.
Ideal for properties in areas with less demand and where comparable sales data can ensure the seller can set the right asking price, a private sale is when a property is listed for sale through an agent, with a price attached.
In a private sale, the property is marketed and then prospective buyers make offers to the agent, who presents them to the seller, who then decides whether to accept or not. It’s viewed as a less stressful option than an auction by many.
Offering more privacy than an auction – where the final number is public knowledge – private sales can also be less costly than going under the hammer. On the down side, there is a cooling off period, which gives the buyer time to change their mind, Labiris says.
When working with Adam and Lisa Salemme, the owners of a renovated two-bed brick home in the Melbourne suburb of Heidelberg recently, Labiris recommended an auction off the bat.
“There isn’t a lot of stock on the market and the home will appeal to three or four different buyer groups, such as downsizers, upsizers, investors and first-home buyers, so it’s best to auction it,” he says.
The vendor says the auction strategy was part of Labiris’ original pitch when he and his wife were looking for an agent.
“James actually proposed it before we signed on the dotted line and knowing how much local knowledge and experience he has, we were comfortable to back his judgement,” Salemme says.
While he knows the actual auction day will most likely be a “bit nerve-wracking”, he’s confident it’s the right approach.