Choosing a method of sale: Auction vs private treaty

Before determining whether to sell your home privately or at auction, you need to consider the specifics of your property, the neighbourhood and what’s happening on the property market. All of these will determine the most appropriate way of selling your home so here’s a list of things to consider when making your decision:

• What is the norm in your area?

Unless your property is very distinctive or unusual, you’re unlikely to get much interest and enthusiasm from a crowd of potential buyers if auctions just aren’t the done thing in your area. Consider how other properties are sold in your area and how that might work for you. However, in some suburbs, if you don’t hold an auction you may be risking the perception that there is an issue with your home that makes it unsuitable for sale in that way.

• Is your property of a kind that is in high demand?

If your house has unique or special qualities such as features or location that buyers would be prepared to compete for, auction may be an ideal way of taking advantage. However, if this is not the case, you may struggle to draw a crowd that would give an auction the momentum it needs.

• Is the property market in your area booming?

When prices are going up and up in your area, buyers are keen to buy even quite ordinary homes because they’re fearful of missing out and having to pay more at another time. This anxiety encourages buyers to bid higher than others in order to secure your property. The thrust and parry of an auction is the perfect setting for this. However, if there is not a great deal of excitement and demand from buyers for properties in your area, an auction may fall flat and you may not get a bid at a price you’re happy with.

• How quickly do you need to sell your property?

If you need to sell your home in a particular time frame, an auction may be best because even if your property passes in on the day, it will usually sell within the next week or so. If you have more time and want to sell your property in a more relaxed way, a private treaty sale might work as a property can sit on the market for several weeks – you will also have more time to consider offers.

• Can you handle the marketing, inspection and sales processes yourself?

If you find it a chore and it falls outside your comfort zone, an auction could be the best way to go. Auctions have specific and intense marketing periods running for around four weeks and, if you’re lucky, it then culminates in ten minutes or less of bidding on a specific day and then it’s over.

Karin Derkley is a the former deputy editor of Personal Investor magazine, and continues to write for The Age and AFR Smart Investor. She has also lived through the pleasures and pitfalls of purchasing and renovating her own home. She is the author of Selling Your Home for Dummies, published by Wiley. The Dummies brand is celebrating its 21st anniversary in Australia in March. This is an excerpt from Selling Your Home for Dummies.

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