If you’re ready to sell your home or investment property, you’ll need to decide whether to sell it under the hammer or advertise it with a ‘for sale’ price.
Both methods have their pros and cons. Working out which is best for you will depend on several factors, including location, property type and the state of the market.
Where do you live?
Australia’s two biggest property markets, Melbourne and Sydney, comfortably account for the majority of property auctions in this country. If you live in either city there’s a good chance your agent may recommend selling by auction, particularly if you’re close to the CBD or have a high-end or unique property to sell.
Outside of Melbourne and Sydney, your agent may still recommend an auction if your property has a lot of interested potential buyers.
What’s the state of the housing market?
Auction clearance rates are one useful indicator of the state of a property market. When demand is high, an auction is more likely to be successful. Conversely, low clearance rates may point to a market with weaker demand.
Auctions usually work best where competition is high. Knowing whether you’re in a buyer’s or seller’s market could help you understand the current climate in your area and the level of buyer demand.
Following an appointment with one of our Home Lending Specialists, you can access CommBank’s Property and Suburb Reports, which provide the latest information about property activity in your neighbourhood and can help you make an informed decision.
Benefits of going to auction
If there’s a lot of competition at your auction – or even just two committed bidders – you may get a higher sale price than you expected.
Another advantage is that the top bidder at an auction is committed to buying the property – there’s no cooling-off period as there is with private treaty.
In addition, you (as the seller) usually set the terms of the contract, whereas with private treaty sales there’s more opportunity for buyers to negotiate the details.
Having a fixed auction date for the sale of your property can be helpful if you’re buying a new property and need to coordinate the timing of your sale and purchase.
Things to consider about auction
Auction advertising campaigns typically cost more than those for private sales.
Also, an unsuccessful auction – one in which no potential buyer bids up to the reserve or at all – can be an uncomfortably public exposure of the lack of interest in your property.
Benefits of selling by private treaty
If you sell by private treaty, you set the price you want up front. Without a deadline there’s less pressure to accept low offers than there might be at auction.
The costs of private treaty marketing campaigns tend to be lower than auction campaigns, as long as the campaign doesn’t go for too long.
Things to consider about private treaty
Selling by private treaty can blow out the length of time it takes to sell your property. It also doesn’t necessarily provide fixed dates in the same way auctions can, potentially making it more difficult for you to schedule your selling and buying timelines.
Ask your agent
Talk to your agent, or a few agents, for advice on whether selling by auction or private treaty is right for you.