07.Private sale vs auction
This is one of the more contentious areas. Some agents think the best price is achieved at auction, where high emotion, pressure and competitiveness among buyers can lead to higher prices. Others take a totally opposite view and say that private sales are the way to go.
Ask different agents to explain their views and the pros and cons of each approach for your situation. There are no hard and fast rules about which types of property are more suited to an auction or private sale, but some of the advantages of each for sellers include the following. (Thanks to the REIA for some of these tips.)
Auction advantages for sellers
- Competitive bidding, which means there’s no price limit. This can be good for unusual or particularly desirable properties that are hard to price.
- A definite sale, assuming the reserve price is reached.
- A set date for sale encourages potential buyers to act quickly.
- Auctions can identify the most suitable buyers to negotiate with, if a sale isn’t completed at auction.
Private sale advantages for sellers
- More time to consider buyers’ offers.
- Potential buyers make offers ‘blind’, without knowing what others are prepared to pay.
- Advertising expenses for auctions can be higher than for private sales. For example, one shadow shopper was given comparative costs for his property of around $9500 for an auction, compared to $1605 with a private sale. A more typical cost for the advertising and marketing of a property for auction is $4000 to $5000.
- No auctioneering fees.