Auction or private sale: which is best for your home?

When you’re preparing to sell your home, one of the first big decisions to make is which sale method you’ll use: auction or private sale.

There are pros and cons to both and the best method for your home really depends on a variety of factors, such as location, the level of interest, the type of property, and timing. An expert real estate agent can help you make the call that will get the best result for your home.

Here’s a brief summary of how each method can work for, or sometimes against, your home.

All about auctions

Auctions are a popular method of sale in Melbourne, and they have many benefits. From a buyer’s perspective, they level the playing field by affording the opportunity to size up the competition. They’re particularly suited to properties that are in high demand, unique in some way, or in situation when you want a quick sale.

Auctions can be emotional, so they inspire urgency and competition among buyers. In a high-pressure auction situation, buyers might find it harder to be objective, especially when they really love the property. And the competitive nature of auctions can get bidders really determined and fired up. All of this tends to drive the price up.

At auction, you also get the protection of a reserve price – that is, the lowest figure you’d be willing to sell for. There’s also the possibility of selling for more than the reserve, sometimes significantly so.

But there are a few downsides. Some buyers find the environment of an auction intimidating. Their emotionally-charged nature can lead to a higher sale price, but the fact that there is so much emotion at play can sometimes work against you instead. And in a block of units where the price of the neighbouring units is known, private sale may be the key to achieving a higher price.

All about private sales

Private sale is still the dominant method of selling, and about 70% of Melbourne homes are sold this way.

A private sale can be far less intimidating for buyers who might quake at the idea of a high-pressure auction situation. They can be less stressful from a seller’s perspective too; if you don’t reach your reserve price on auction day, you’ll need to make an on-the-spot decision about whether to pass-in the property or change the reserve while buyers wait in the front yard.

A private sale works well when selling the property isn’t a matter of urgency, because the process allows for extended settlement periods and sale subject to finance, giving you extra options when it comes to finding the ideal buyer and more time to mull over the offers that you receive. Private sales are ideal for properties in areas experiencing less demand; the whole point of the auction is to inspire competition between a group of buyers, so there’s no point going to auction if the demand just isn’t there.

This method of selling also offers great privacy, if that’s a concern. Not everyone is comfortable with having the sale price of their property be public knowledge. The private sale process can also be less costly than an auction.

There are also some negatives; first is the cooling off period, which gives your buyer time to change their mind. The overall sale process can also take longer, and sometimes you’ll have less power than you would in an auction situation to negotiate the price up.

The decision about which sale method is best for your property is up to you and your agent. Making the correct choice will make a world of difference to the final price that you can achieve for your home.