Every property is different, but when it comes to selling, there’s only three ways to do it: auction, private treaty or sale by expression of interest.
Understanding the options – which each have advantages and disadvantages, depending on market and area trends – then choosing the best method of sale is crucial for all vendors.
There are three ways to sell – auction, private treaty or sale by expression of interest. Picture: Getty Images
Auction
Most people are familiar with auctions, which have become increasingly popular across the country, and are often depicted on reality TV.
An auction is a private sale held at a specific place, time and date, after a marketing campaign over several weeks. A licensed real estate agent conducts the auction and sells once a reserve price is reached. Auctions are governed by strict rules and regulations, which differ in each state and territory.
An auction is a private sale held at a specific place, time and date after a marketing campaign. Picture: Getty Images
Private treaty
Private treaty (or private sale) sees a property listed for sale through a licensed real estate agent, with an asking price attached.
The property is marketed, and potential buyers make offers to the agent, who presents them to the seller, who decides whether to accept or not.
Typically, negotiations go back and forth until an agreement about price and terms is reached. Multiple offers are often managed by the agent, with all discussions done in private.
Private treaty sees a property listed for sale through a licensed real estate agent, with an asking price attached.
Sale by expression of interest (EoI)
Sale by EoI sees vendors invite buyers to submit an offer to purchase their property, by a specified time and date. Each potential purchaser puts forward their best and final offer in writing.
Generally, a property will be on the market for four to six weeks, to enable the vendor to market the property and ensure ample time is given for buyers to look through the home, finalise their finance and decide on a price. Potential buyers then put in submissions.
The vendor reviews the submissions and chooses the EoI that interests them the most.
Sale by EoI sees vendors invite buyers to submit an offer to purchase their property, by a specified time and date.
Which is best?
But which sale method is best? LJ Hooker’s national auction manager David Holmes says in almost all situations, an auction is the way to go.
He says an auction date creates a sense of urgency, preventing buyers from delaying their decision. It also brings all interested buyers together at the one time, creating a competitive environment.
“An auction says ‘act by this time’ and that works in the sellers’ favour,” Holmes says.
Auctions attract more prospective buyers, because they’re not put off by an asking price, he adds.
If you’re selling in Sydney, an auction is the way to go.
“Buyers can look through the property and have a chance to make an emotional connection with it. Whereas they might see a price on a private sale and think ‘oh, it’s out of my range’ and not even look at it.”
He says an auction is powerful because it’s transparent. “It’s the purest way to know what the property is worth in the market. If bidding stops, you’ve got a clear indication of where it sits,” he says.
Having an auction doesn’t prevent a private sale, if the right price is offered before auction, or being sold after auction, if it’s passed in, Holmes says.
