There are several ways to sell off your property, but selling at auction and through private treaty have been in the limelight slightly more than the others. That’s mainly because of the never ending debate on which of these is better than the others.
Truth is, they both equally matter. You only have to choose the one that works best for you; and what better way to decide that than understanding the pros and cons for each.
- The urgency. Auctions create a “do or die” situation for the buyers. They know that if they don’t take quick timely decisions they would lose out on the property. This makes potential buyers act fast.
- The competition. Auctions often convert into competitive arenas where buyers compete to quote the best price. This increases the chance of maximizing the sales price with each bid being higher than the one before it.
- The terms. Auctions give you the freedom to decide specific favorable terms for the sale of your property. These sales do not have cooling off time or other settlement clauses that are unfavorable for the vendor.
- The reserve price. Auctions allow you to set a reserve price which ensures that your property does not sell for anything less than that amount. With no limits on the bids, there is a chance that your home could sell for far more than you expected.
- The costs. Auctioning your house may involve additional expenses like the auction fee or the hiring fee of the auctioneer. These costs often add up to a considerable amount when considered collectively. To reduce the cost, you might want to consider specialized packages offered by commission-free websites.
- Unconditional sales. Bids at an auction are mostly unconditional. This makes it difficult for buyers who are looking to purchase property subject to availability of finance. It limits the number of potential buyers.
- Not overwhelming. The experience of buying a house through auction can be intimidating for most buyers and may often lead to hasty decisions that they regret later. Private treaties allow buyers ample time to think through and decide on the home they wish to purchase.
- Less costs. A private treaty is often more cost effective than the auction. The sale campaign normally does not require extensive financing unless you wish to go overboard with the marketing. It is always a smart idea to compare the expected costs of the two methods.
- You have your privacy. The contract, process, and negotiation of the sales remains strictly between you, the buyer, and the agent (if any). There is little or no chance of the details leaking out in the public.
- It may take longer than usual. Since there is no due dates or predefined time periods for the sale, the buyers may not develop a sense of urgency to act quickly.
- There’s a cooling off period. It varies from state to state but allows the buyers enough time to revert their decision of buying the property even after the contracts are signed.
- You may get prices lower than the one you quoted. Unlike auctions, private treaties do not have the option to increase prices through bidding; hence they are often subject to negotiation in the buyer’s favor.
With the pros and cons for both methods of sale laid out for you, you now only have to consider your situation and see what suits best for your circumstances. In case you have a tough time deciding what’s best for you, consult your real estate agent for sound advice.