Private Sales vs Auctions – How to choose what’s right for you
‘Should I sell my house privately or go to auction’ is one of the most asked questions from people looking to sell their home. And rightfully so – selling your house is a significant life decision, and you want to get the highest price possible.
You’ll find that private house sales or auctions both have pros and cons, and your real estate agent should guide you on what will work for your situation.
When it comes to selling your home, a few factors will be considered, such as your location, the age and style of your home, the current real estate market, and the potential buyers.
Let’s explore the pros and cons of private house sales vs house auctions.
Private House Sales
A private house sale is where you list your home for sale using your chosen real estate agent. You’ll agree on an asking price, and the agent will list your property on their website, online real estate platforms, and office.
Your real estate agent will be able to guide you on your house value and what you can expect due to your location, your home and comparable house sales.
Potential buyers will contact your real estate agent to ask questions, attend your scheduled open days (or request a private inspection), and ultimately, put in an offer.
Your real estate will keep in touch with potential buyers, negotiate prices and gather offers (hopefully a few!). They will then present all the offers to you.
When you consider the offers, you will need to check the buyer’s terms (i.e. pending finance, settlement date, etc.) to see if they suit you.
If everything looks great and you agree to their terms and financial offer, sale contracts will be drawn up.
Pros of private house sales
· Unlike an auction, you don’t have a deadline, so there’s less pressure
· You can take your time to review offers and don’t have to consider the low-ball offers that may be presented at the start
· You can shortlist offers that suit your needs:
· Short (or longer) settlement date
· Finance is already approved (as opposed to ‘pending finance’)
· You’ll find most people who are looking to buy (and who are in contact with your real estate agent) are genuine buyers and ready to purchase
· Your real estate agent may already have a list of potential buyers who are ready and waiting to buy a home in your area
Cons of private house sales
· When buying a house through a private sale, a ‘cooling off’ period is always written into the contract, meaning the buyer has the right to change their mind within a specific timeframe. This is very unlikely however, cooling off period is very rarely used.
· You need to make sure you’re advertising your home in the right price bracket to avoid selling it for less than it’s worth or having it go stale on the market as your asking price is too high
House Auctions
House auctions are recommended if there’s a high demand for properties in your area, and if your real estate agent is confident that you will attract multiple unconditional buyers. In some regional areas like ours, there are normally multiple buyers, however, are they may also be subject to finance clauses.
You’ll choose a real estate agent to list your property with, who will do all your marketing and promote your property to buyers. Together, you’ll agree on your ‘reserve price’.
A reserve price means this is the lowest price you will accept for the sale of your house. Once this reserve price is met at auction, your house becomes officially listed for sale. But, if your home doesn’t reach the reserve price at auction, it won’t be sold (it’s called being ‘passed in’).
You can then choose to sell your home privately, sell again later, or have your real estate agent negotiate with buyers close to your reserve price.
On the auction day, the licensed auctioneer or your real estate agent will keep in touch with you to let you know how the bids are progressing and advise on how close you are to hitting your reserve price.
Pros of selling your house at auction
· Buyers are competitive and ready to buy
· Auctions create urgency that plays on a buyer’s emotions, who, in the heat of competition, will keep bidding until they reach their absolute limit, driving your price up
· You can set your reserve price, so you know you’ll get the best deal possible for your house sale
· You choose the settlement date you’d like
· You have an option of selling before the auction (if you receive an offer you can’t refuse), at auction, or through negotiation if your house is ‘passed in’ at auction
Cons of selling your house at auction
· Auction campaigns may be expensive as your agent will use extensive marketing to create a buzz about your home, inspiring more competition amongst buyers
· An auction is generally a public event (unless you opt for a private auction), so you may attract a lot of stickybeaks who want to see your home and hear what you sell it for (i.e. neighbours or others trying to feel out the market)
· Public auctions may also turn potential buyers off who aren’t comfortable bidding in front of an audience or are unable to bid with auction conditions
· If you don’t hit your reserve price, potential buyers may walk away as they’re not willing to go any higher
What option is best for you when selling your home?
Whether you choose to sell your home privately or go to auction is entirely your choice. You’ll need to weigh up the pros and cons for your home, its location, the interest you may receive, and the current real estate market.
Be open and honest with your real estate agent, and ask them every burning question, fear or concern you may have.
The experienced agents from One Agency Country to Coast have been helping people buy and sell homes for many years. They are on hand to support you when you decide to sell your home and expertly guide you on what will work for you.