What strategy you use to sell your property will depend a lot on the type of property you have, the Agent , and your own circumstances and preferences. You will need to choose a strategy when you list your property with an Agent, because the sales strategy selected will be written into your agreement with the Agent.
Talk to a few Agents in your area before you settle on one of them. You can get invaluable insights on the different points of view of each Agent. Also, they will each have an opinion on the potential price that you can achieve for your property.
Your options include:
by fixed price
Let's look at sale by
auction and sale by tender first.
The auction process typically involves you placing the property with one agent exclusively for a period of time (normally 4-6 weeks). The property is strongly marketed and usually remains silent as to price, although sometimes a price range is included. Auction almost always involves an exclusive
agency with one or possibly two agents. By giving an Agent an
exclusive agency for the sale of your property, you are giving to them the
monopoly rights to sell your property. This usually means that if the property is sold by yourself or another agent during the
exclusive agency period, then your Agent can still get their commission (you therefore need to be very careful, because you could end up paying commission twice!)
Prior to the auction day a reserve price is set by you as Seller, usually in consultation with the Agent. The auction takes place in hired rooms or on Site, and if the highest bidder reaches or exceeds the reserve price, the property is
Auction has become increasingly popular in recent years and
it does have certain benefits:
The marketing campaign is normally very strong, and is focused, as there is a time limit (auction day). This creates a lot of awareness amongst potential buyers
If you are unsure of what the price of your property should be (for instance if it is a unique type of property), then bidding at auction gives a good indication of its market value
You have the potential of getting a premium if there is more than one bidder who really wants the property
If the property is sold,
the Contract is normally ‘unconditional’ which means that
it should definitely go ahead on settlement day (eg it is
not subject to the buyer getting finance, or doing a
building inspection, etc).
There are some downsides to auction too, however:
Many properties are passed in on auction day, although they do tend to sell in the weeks after the auction
If the bidding has been low, it can send an incorrect message to buyers after auction that the property is only worth that much
Some buyers do not like the Auction process and will not bid
Auctions can be expensive, as the marketing and advertising campaign surrounding an auction is usually fairly strong. There may also be costs associated with an Auctioneer and hire of rooms. Ask your Agent to set out these costs in writing before you make a decision.
Because most Agency agreements for auctions give the Agent a sole agency during the run up to Auction and for a period afterwards as well, you are locked in to one Agent for a long time. It is a good idea to give the Agent a certain period after Auction in which to sell the property (if it
was passed in) but you may like to limit this period to say, 30 days.
Sale by tender works in
a similar way. The property is marketed strongly, as with
the Auction, and normally without a price (or only a broad
price range). Interested parties do their searches and
inspections, and submit written ‘tenders’ or offers before
the due date. These offers are usually unconditional. On the
closing date, all tenders are considered and the Seller can
choose the highest tender. If no tender is considered high
enough, then the Agent can go back to that tenderer and see
if they are willing to increase their offer.
Some of the benefits of tender is that the bidding is kept confidential, with each bidder not knowing how close to the mark they are. Unlike with Auction, where you can seek to outbid rivals by offering small amounts more, in the tender you are literally ‘blind’ – you have no idea what your competitors have offered, The hope is that if you want the property badly enough, you will submit your best offer first, which may exceed greatly the amount of the second highest
In summary, auction and tender can be a great way to sell a property, particularly if it is unique (eg riverfront, or a unique style), or is in a ‘high demand’ area (where you have the real possibility of having a number of interested buyers). For more ordinary properties, you may prefer to consider the fixed price sale.
Sale by fixed price is still one of the most popular methods of sale for residential property. Setting a fixed price can be a tricky business, because if you set the price too high, you may not sell for some time. By the same token, if you set the price too low, you may short change yourself. Here are some tips on how to select the right price:
Talk to a number of Agents in your area, and get their
ideas on price. Be mindful that some may be too
optimistic in estimating the price, because they are
hopeful that you will list with them.
Look at your property through the eyes of a third person – what are its good and bad points? Look at other properties that have sold (not that are listed but remain unsold!) – how do they compare with your property.
Look in the paper at the prices listed for properties in your general area. Go and have a look at a few and