What is an auction?
As the name suggests, an auction is carried out when there are several interested buyers. They place bids and the highest bidder is considered successful. As a seller, you set the reserve price in consultation with your agent. The auction is successful if a bid reaches this reserve price. There could be a bidding war, jacking up the price of your house. If only one buyer shows interest and reserve price is not reached, the auction is declared unsuccessful.
Advantages of Auction
•Reserve price is set by the vendor so there is no chance of your house being sold for less than this price
•Seller chooses the date of the auction
•The auction takes place in a limited time frame, so buyers may feel a sense of urgency
•Once the highest bid is accepted, the buyer must sign the contract and doesn’t get time to reflect upon his decision
Disadvantages of Auction
•You may spend need to spend money on advertising for an auction vs private treaty. This money is lost when the auction becomes unsuccessful.
•Buyers show reluctance to buy your property in case auction is unsuccessful
•Many buyers do not like the idea of taking part in an auction and stay away from the proceedings
What Is A Private Treaty Sale?
It is the traditional process of selling a property, where you set the asking price and the agent negotiates with interested buyers. Even though called private sale, any number of buyers can express interest once the property is listed on the market.
Advantages of Private Sale
•Cost of private sale is less than that of auction
•There are no deadlines and there is no pressure to accept whatever offers come in
•Buyers showing interest are genuine buyers
Disadvantages of Private Sale
•It may take longer to sell a property
•You may have open for homes at inconvenient times
•Some buyers try to lower the asking price through bargaining
Auction are a good idea if there are many interested buyers for your house. If your agent is confident about selling your property at your asking price, a private sale may be a better idea.