Buying or selling property is a big move and one of the more significant financial decisions you will make.
In this post, we will focus on selling your property. Few people buy a property and hold onto it forever. At some time in your life, you will sell your house or one of your houses (if you happen to own more than one).
There are 3 main forms of selling a residential property:
- private treaty/negotiation
Auction: With an auction, interested buyers register their interest. At the auction date, the auctioneer will facilitate a bidding process, where interested buyers will bid against each other in an effort to buy the property at the highest price. The vendor can set a reserve price. If the highest bid price does not reach the reserve price, the vendor can choose not to sell. In this case, the property will become “passed in” and interested parties can negotiate with the vendor/vendor’s agent.
Auctions work well when the market is booming. It is the best gauge into market value and also you can get an indication of how the market is going.
Private treaty: This is becoming more common where interested buyers negotiate directly and submit an offer with the vendor/vendor’s agent. The vendor can reject the offer and make a counter offer. This to and fro process can go back and forth many times before a sale goes through. There may be a multi offer where the vendor may take multiple offers and choose the best one. And there are also backup offers which may be accepted if there is a conditional contract signed but then falls through.
Tender: Tender is best reserved for luxury residential and commercial property. This is similar to an auction except the bids are sealed and closed. An auction is open to the public. In a tender, each person submitting a tender offer can stipulate a price and conditions. There is a tender date deadline and then generally all the tenders are open in the presence of the vendor. The vendor can choose to accept or reject the tender offers. Due to the nature of the tender process, it does attract fewer interested parties. But then again they tend to be more serious buyers who put in a tender offer. For this reason, this is best left to luxury properties and commercial properties.