What Are The Different Ways I Can Sell My Property?
After choosing the best agent to sell your property, the next step is to select your method of sale. This will depend on a number of factors including your property, its location, your timing and your personal preferences.
Whilst your agent will talk to you about the different ways you can sell your property and will help advise you on the best method for you and your situation, understanding your options will ensure you can make an informed decision.
Here is a deep dive into the three key ways to sell a property in Australia, and a look at the pros and cons of each.
Selling a property by private treaty / private sale
A private treaty / private sale occurs when a property is listed for sale with an asking price. Interested buyers make an offer to the agent, who in-turn present the offer to the seller. The agent will negotiate individually with prospective buyers to achieve a sale as close to the seller’s asking price as possible. This is a popular method of sale right across Australia.
It is fairly common for a potential buyer to offer to purchase your property with a price lower than your asking price, so sellers should be prepared for some negotiation to take place. The goal for these negotiations is to achieve a final sale price that is as close to your original price as possible and is acceptable for both the seller and buyer.
Advantages of selling via private treaty / private sale
- Traditionally private treaty /private sale gives more control to the seller, and greater flexibility for negotiation. Sellers can take time to consider offers and negotiate until they are happy with the price and the terms of the contract
- By advertising a property for a certain price, it helps find the buyers who are looking for a property within that price range.
- Some buyers will only buy a property via this method, preferring to know the purchase price
- Marketing costs can be lower, as agents can spend more time working through their networks to find buyers instead of promoting your property across a wider range of advertising channels
Disadvantages of selling via private treaty / private sale
- Without a specific deadline for the sale, the sale can be protracted as buyers don’t have the urgency of an auction deadline to make their decision.
- Working out the asking price for the sale can be challenging, you don’t want to go too high, but you definitely don’t want to go too low. Markets change monthly and making an educated guess as to an accurate sale price can be tricky.
- Selling via private treaty / private sale gives the buyers a cooling off period so they can complete their due diligence and if they end up not being happy following this they can rescind their contract
- Buyers normally negotiate down from the asking price so it is important that your price has some buffer to account for this. Your agent can help here.
- You may need to make your property available for inspections regularly over a long period of time, which can become tedious
Selling a property by auction
A real estate auction is a public sale of a property where prospective buyers gather to publicly bid on a property. If the property reaches the reserve price set by the seller, or if the seller is happy with the price, when the hammer falls, the property will be sold to the highest bidder. Contracts will be signed, deposit will be paid, and as there is no cooling off period the buyer is legally obliged to buy the property. Historically, McGrath have favoured auction over other methods of sale, and we’ve achieved outstanding results this way.
An auction by the fact it is held on a particular date and at a specific time, creates a level of urgency. By grouping all interested buyers together at one time it can also have the effect of creating a competitive environment, and as we have seen right across our network, it can help ensure the highest possible price is achieved.
The benefits of selling via auction
- The price for a popular property can be driven above market value if there is strong bidder competition. This is particularly valuable for properties that can’t be easily priced on the regular market.
- An auction campaign normally runs for 4-6 weeks and includes an intensive marketing campaign. This adds a feeling of urgency and excitement to the sale.
- If you are in a hurry to sell, an auction offers the best chance of selling the property by a certain date.
- The vendor is protected by the reserve price. They specify the amount they are willing to accept for the sale of the property and if it doesn’t reach the reserve the vendor can choose to lower the reserve or to pass the property in, or in other words not sell. In most cases when a property is ‘passed in’, it sells shortly after via negotiation with one or other of the highest bidders.
- A sale via auction is unconditional and there is no cooling off period. All contract negotiations such as inclusions, settlement date etc must have been agreed prior to auction day. The successful bidder will sign the contract immediately after the auction has concluded and must pay a deposit, normally 10% of the sale price. The buyer is legally obliged to purchase the property.
- A pre-auction sale can occur. This often happens if the bidder feels there will considerable competition at the auction and they want to secure the property before auction day.
Disadvantages of selling via auction
- Some potential buyers don’t like buying at auctions and therefore may choose not to attend or bid
- The highest price achieved at the auction is an indication of how much the market is prepared to pay and this may be lower than the sellers expectation.
- Depending on the wider macro and micro market conditions, bidders may not be active at the auction, which can send an incorrect message about the true value of the home.
- Due the nature of the short 4-6 week advertising campaign, the costs to advertise are generally more expensive than private treaty / private sales
Selling a property by expression of interest / tender
These methods of sale are fairly similar. They are essentially a type of closed silent auction. Buyers are invited to submit their best offers by a particular date and time. After the closing date, the seller and their real estate agent will review the submitted tenders and accept, reject or negotiate with buyers to achieve an outcome both the buyer and seller is happy with.
This method of sale has traditionally been more suited to high end or exclusive properties.
Advantages of expression of interest / tender
- With all bids kept confidential, potential buyers cannot base their offer on what others are bidding, and are forced into making their highest offer. This can potentially lead to the winning offer being significantly higher than other offers.
- The seller retains control over the selling process and can accept or reject offers. If they reject the offers they have a starting figure to negotiate from
- By adding a deadline to the sale, it creates a greater sense of urgency. Buyers must compete with each other as they would at an auction but it is more private
- It only requires only one interested buyer to put forward their highest offer, it is not dependant on competitive bidding.
- Depending on the property an EOI/Tender can lead to higher prices than an auction. Auctions stop bidding once the weaker bidder pulls out, but the buyers may have been prepared to pay more. Using this method, this doesn’t happen, the highest bidder will offer the highest amount they’re willing to pay, because they don’t know what the others are offering.
- It opens the market to more buyers who cannot meet the strict auction conditions of sale
Disadvantages of expression of interest / tender
- It normally attracts a cooling off period of 3 full days which may result in a buyer pulling out
- As buyers have no idea what other buyers are offering, it may lead them to submit lower bids than the seller expects, because they have no idea of the property’s true market value
- If you decide to reject the offers and negotiate with potential buyers, this can take a while to reach an agreeable amount
- Marketing costs can be high due to the tight time frame of the campaign
- An EOI /tender campaign is normally shorter than an auction campaign which may mean few buyers are aware your property is for sale
- It is a method more suited to high end or exclusive properties, it is not suitable for all properties.
Choosing the best method of sale when selling your property
Your real estate agent is the best person to help guide you here. They will consider the following elements before recommending the best method of sale for your property:
- The kind of property that you are selling
- The location of your property
- The condition of the local real estate market, is there demand, is there a lot of competition
- How quickly you want to sell
- Your personal preferences
Your agents’ goal is to sell your property for the best possible price and the method of sale is key here. Discussing this up front with your agent is an important piece of the selling puzzle. To talk to your local McGrath agent about your property click here.
Can I sell my house privately?
Selling a house privately is an option for all homeowners across Australia. If you choose to sell your own house or apartment, understanding the steps involved is important. Firstly, you need to understand what similar properties are selling for in your neighbourhood, how long they are on the market and what method of sale they selling by; auction, or private treaty? This can help you with pricing and understanding demand in the local market.
Next you need to work with your lawyer or conveyancer to prepare you sale documents. This is a critical step in the process of selling a property. Having a contract ready to hand out to interested buyers at open for inspections, or to email interested buyers, can help speed up the sale process. Note if you are selling in NSW or the ACT, you legally must have a Contract of Sale prepared before you list your property for sale.
The next stage is all about finding and attracting buyers to your property. Professional photos are a must, as is a detailed property description highlighting the key selling features of the property. Advertising your property online via websites such as realestate.com.au and domain.com.au will enable you to reach the majority of interested buyers. Plus organising a ‘For Sale’ signboard to put out the front of your property will help you catch the attention of passive local buyers who may not be actively looking online.
If you are selling a house privately you will need to host the open for inspections yourself. Make sure you capture the names and phone numbers of everyone who attends the inspection. This is both for safety reasons and to ensure you can follow up buyers with a phone call to see if they are interested.
If you want to sell a house without an agent you will be responsible for receiving and negotiating offers from buyers. A tip from our agents is make sure you ask to receive the offers in writing. Once you have written offers you can negotiate the price. Real estate agents are expert negotiators and offer enormous value here, but if you are selling a house privately, and don’t feel comfortable with this step, talk to your conveyancer or lawyer and see if they can help.
Once you have agreed to the final sale price, contracts need to be signed and a deposit needs to be paid (normally 10%). The deposit will need to be held by your conveyancer or lawyer until final settlement. Between the time you sign the contract and settlement day, you will need to work with your legal team to ensure all of your requirements detailed in the Contract of Sale are completed before settlement day.
While some homeowners love the sound of selling their house without an agent and saving on the commission, having an expert who is skilled at the process can make a huge difference to the final sale price.
Real estate agents know:
- What method of sale you should use to achieve the highest price
- How to market and advertise your property to reach and appeal to the maximum number of buyers. Plus they have a local database of active buyers that they can promote your property to
- How to negotiate to achieve the highest sale price possible
Overall, as real estate agents live and breathe real estate in your area, they can add enormous value to the process and most importantly to the final sale price. So, before you choose to sell a house privately talk to your local agent about what they can offer you and your property sale. To connect with your local McGrath Real Estate agent, click here.
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