For anyone selling a property, the obvious goal is to get the best price. But once you begin the process of selling your property, one of the first things you’ll need to determine is whether or not you want to sell via auction or accept offers by a certain date.
Your real estate agent will ultimately be the one to help you with this decision; they know the local market and will assess your property in that light, offering a solution that makes the most sense.
But it is still helpful to know the advantages and disadvantages of each. Here they are:
One of the nice things about selling at auction is that you do not have to sit through a cooling off period. A successful bidder must sign a contract right then and there, and you as the seller must do the same, making the deal official right in the moment.
Also, the contract you sign at the time of sale is final. The buyer will not have the chance to add in further conditions once they’ve won, giving you greater certainty and more control over the conditions.
One nice feature of auctions is that the seller must set a ‘reserve price,’ which is a low price limit the seller is not willing to go down from. If the house does not reach that level, it is ‘passed in,’ meaning the seller does not have to sell.
You as the seller are legally allowed to bid to try and drive up the price, but the auctioneer must disclose that you are doing this. Not informing people you are bidding on your own property is known as ‘dummy bidding,’ and it’s illegal.
When people bid on a property they like, it is often easy for them to get carried away. They may commit to spending a few extra thousand here and there, and this can quickly drive the price up. For the seller, watching people compete over their property while simultaneously seeing the price go up can be a real thrill and is a major advantage of an auction.
Best offers by?
By setting a deadline for offers, the agent is creating a sense of urgency, encouraging potential buyers to make an offer. Unlike an auction, people won’t know exactly how many people are bidding on the property. It isn’t unlikely that a buyer increases their offer assuming there is going to be high competition or that there is someone else out there equally as prepared to make an offer.
By choosing to sell by best offer, you are opening the door for negotiation. While price will often be the focal point of these talks, you can also negotiate over things such as the deposit or the settlement period.
When people reach an agreement through negotiation, it makes them feel as though they’ve gotten the best deal. There will of course be compromise, but it is different than the type of binding agreement that comes from an auction.
Choosing the right method for you will depend on your market, your property and your preferences. Talk to your real estate agent so that they can answer any questions you have and help you arrive at the right decision.