Auction Vs Private Sale, What Is The Way To Go In 2016?
It is the age old question, should I auction my home or sell it privately? After all, you want the highest price for your home so will one method get a better result than the other? The answer will depend on a lot of variables and a lot depends on the area you live in. I’m sure if you keep an eye on the local market you will notice that one method is used more than the other in your area. But does that mean that it is the right strategy?
I always find it interesting that it is considered that a good clearance rate is 75%. That is, 75% of the homes going to auction over a weekend are successfully sold. What isn’t spoken about is the 25% of unsuccessful sales. Often these homes sell fairly quickly afterwards, but there have been signs of a slower market in recent months so buyers might not be so quick to buy properties that are passed in during 2016.
For a home not to sell at auction, it means the reserved price (or lowest the owner was prepared to accept) was not met. What this means is usually one of two things, either:
The reserved price was unrealistic. That is, the price set was above what the market was prepared to pay. This expectation is either set by the vendors experiences of seeing other properties in the area sell, or by the agent over quoting (often to get the business to start with). Either way, a failed auction is often a wake up call and a very public way to find out the markets perception of the true value.
The second reason for properties being passed in is an auction was not the best way to sell that property in that market. Scarcity is the key to an auction, if your property is less scarce; it is going to be more difficult to sell. That is, if you own a unit where three other similar units are for sale you have less scarcity. Buyers are more likely to hold back as they have other options and not bid at auction.
So what about a private sale? The advantage of an auction is that is out in the open and the competition can see who else is bidding. With a private sale, buyers are guided by the advertised price and agents’ ability to communicate this is a fair market value.
A private sale is less stressful for vendors as there is no build up to one big day. Each week they get feedback and the agent is able to adjust the campaign to get the right buyers through the property.
In the Maroondah area is it still generally best to have a private sale, especially now that it is less a sellers market than 2015 and buyers are more likely to sit back and watch what happens rather than bid.
At the end of the day, each property is individual and deserves an individually campaign to sell it. If you are thinking of selling and want professional advice on whether to auction or sell privately, call Market Share Property today.
23rd February, 2016