Park Lane Property Group

Auction or Private Treaty?

One of the biggest decisions you’ll ever make is selling your precious
home or investment property. But how you sell it is a very difficult
decision to make, with a lot of factors to consider before you leap.
Many would argue that auctions are the most desirable way to sell to
secure the highest possible sale price for your property. Others believe
private treaty would work better, depending on the trends in their suburb.
So how do you choose which system will work for you?

SELLING AT AUCTION
Auctions generate a sense of urgency among buyers. This sense of urgency
is due to a set date for the sale of the property, which compels potential
buyers to make a decision on the day.
It’s advisable to get a pest and building report done prior to auction. This
can be an asset in finding any pre-existing issues which can be rectified
before the auction.
An auction entices competitive bidding among buyers, so the selling
price can sometimes exceed the expected sale value of the property.
Competition between buyers on auction day can be fierce, and can push
bidding well over expected reserve prices.
If your suburb trend is to auction then it would be advisable to follow
suit. Auctions are unconditional sales (no cooling off periods) — once the
hammer falls the property is unconditionally sold.
Most buyers attending auctions are cashed up and ready to purchase.
This is a positive — auctions draw out the genuine buyers.

WHAT ARE THE COSTS INVOLVED?
Putting your home on the market through an auction campaign can change
by suburb and state.
Generally, a price guide is:
• Auctioneer in rooms – $500-750
• Auctioneer on site – $500-650
• Cancellation fees of auction – usually half the auction cost if cancelled
without notice
• Advertising & Signage – refer to your listing agent costs
• Conveyancing – refer to your solicitor or selected conveyancer. It can
vary from state to state.

ONCE I’VE DECIDED TO AUCTION, WHAT DO I DO NEXT?
Contact your solicitor or conveyancer and ask them to prepare the contract
of sale. Advise your solicitor of your desired completion date (Settlement
date) and any special conditions. These need to be listed on the front page
of the contract of sale.

HOW DO I SELECT AN AUCTIONEER?
Speak with your real estate agent — they usually have a selected
auctioneer who works in specific areas and suburbs. Google the
best auctioneer in your suburb and ask your agent for preferred and
recommended auctioneers.

WHAT DOES THE RESERVE PRICE MEAN?
The reserve price is the lowest price you are willing to accept on auction
day, and should be discussed with your agent and auctioneer before the
auction day. It’s advisable to have this settled at least one week before the
auction, and this is done in writing and is signed by you.
If the reserve price has been reached on auction day, you might hear the
auctioneer say, “The property is on the market”. This encourages buyers to
bid to secure the property knowing the property will not be passed in.

IS A PRIVATE TREATY SALE FOR ME?
Selling your home or investment property through private treaty has
many benefits. Some are seasonal, and other factors may include time —
you might not be in a hurry to sell and may need time to find a property
to move to, or you may need to sell an investment.
For Sale selling is a more private way to sell your home. You can choose
not to disclose the sale price and keep sale details out of the general
public’s and neighbours’ eyes, unlike auctions.
One or two open homes a week are advisable. These can be at a time
that you think best represents your home. Sometimes an evening open
home presents well if your home has exceptional lighting and evening
staging.
Making a decision to sell by private treaty offers the vendor time to
consider all offers made with special conditionsYou have more time and
control to consider any circumstances that might arise.
Once negotiations have resulted in an agreed sale price, contracts have
been signed and a 0.25% deposit has been paid (or agreed deposit paid),
contracts are then exchanged. The property will go into a cooling off
period, usually of five business days (this can alter between states). In this
time the purchaser may request to have the property inspected by a pest
and building inspector.
You cannot accept further offers within the cooling off period. Within
the five-day cooling off period the buyers can rescind the contract of
sale but will forfeit the deposit paid (0.25%) — this is forwarded to the
vendor.
If they do not rescind the contract of sale the cooling off period expires
on the fifth day, the balance of the deposit is paid by the purchaser, and
the contract is unconditional.
Congratulations are in order — you can now relax and start planning
your move.
13-12-2017

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