What is Best - Auction or Private Sale?

So which method of sale do you use when you sell your home? Another interesting question and a difficult for many owners. Private treaty is where you have a publicly set asking price. An Auction is where you don't, you have a guide but the guide isn't necessarily the amount of money the owner will take.

Benefits Of Both Methods

In terms of the benefits of both? The benefit of an auction is there is a possibility that people may pay more than even you or the agent had considered due to a desirability of the home. The bell positive of a private treaty sale is it gives a bit more clarity to the buyer, which could lead to maybe a little bit more inquiring on the line of that price. So they both have merit in varying circumstances.

So the benefits of an auction over a private treaty, or vice versa, the one thing about an auction to go to market with a property and be successful is there are two key factors. Number one, the owner's got to buy into their process. That sounds silly but if some owners are hesitant or unsure or nervous about it, you really need to get that sorted before you go to market because there will be bumps in the road in the auction process.

The second thing is it's got to be a property that you have a reasonable degree of confidence that there'll be a competitive interest in. If you don't feel that you're going to get at least two or three parties interested at a price point to compete for the property, you're much better off putting it for a private treaty in the first place. So those two key factors have to be in play for auction. The owner's got to be a partner with you, the agent, in the process and the property's got to have something about it that draws the attention of more than that one individual buyer.

Auctions - Not As Scary as You Think

So auction, scary word for many owners. The two biggest misconceptions around auction that don't apply, one you pay a lot more advertising. That's not true. The auctioneer's fees, the only thing different between a private trader campaign and an auction campaign, depending on what services you want, that's generally a very nominal fee, could be as low as $350, could be as high as $650.

The second fear factor is, if I don't sell the property on the day, it's social suicide. I've failed. I'm a loser. I will never sell my property ever again and it's a disaster. No. It's not true. You get to keep your property. You get to market it after. Sometimes a buyer isn't ready. Sometimes the best buyer comes immediately after the auction. It's not a failure if you ever eventually sell the property. This is the biggest trauma that owners face before they make that decision of auctioning, don't want to be standing there on the day of the property being auctioned and have it not sell. It's a very, very big trauma, but we can help you overcome that fear because in many instances, it doesn't happen. When it does happen, there is a strategy afterward to still get a very good price for the property.

Why Do Auctions Fail

So why does an auction fail? In many instances, it's the agent. The agent's got to have a strategy. The agent's got to have a game plan and they've got to be adaptable because many times the auction, as I've said, doesn't go according to the script. It may have to be able to adapt to that and get the strategy right. Auctioneer is a huge component of that. They are a hired gun. They come in on the day. They're really only spending an hour on the entire process, but they are pretty much that person that comes into the maternity ward when the baby's being delivered. They are the experts. They are the ones that are going to sense, with the agent, where the money may or may not be and help deliver that extra 10, 20, 15, or in many cases hundreds of thousands of dollars by getting the bidding environment to be competitive and desirable. So that's a really key component to how the auctions can be successful.

On-Sight Vs. In A Room

So a key question for auctions, on-site rooms, very biased person, I've always done on site auctions. Why? because there are three components to a sale. There's the buyer. There's the seller. And there's the agent and to be brutally frank, the person who benefits most from in rooms is the agent. Who's selling the property? The agent. Who are they doing it for? The owner. Who's benefiting the most from on-site? The owner.

Economies of scale, eight auctions in a room on a weeknight, we give it eight properties, we sell for eight vendors. Eight auctions on a Saturday, big, big preparation, big effort, lot more labor intensive. Is it better for the owner? Absolutely better to do it on site. Why wouldn't the property be auctioned on site? If we can't get a crowd there if it isn't desirable. The only exception to that would be a part of Sydney or areas of Sydney where on site is very difficult, highly densely populated areas, areas that have something about them that maybe non-conducive to on site. But that's a very, very rare exception to the rule. In my opinion, 95% of the time that's okay, so we're auctioning on site.