Selling your home is always a daunting process. One of the greatest challenges facing home owners is which sales method to use. Now every market is different, and as agents we have a huge range of selling methods available to us, so which one do you use as a seller? Which one is going to generate you the best price?
Selling your home has definitely gotten more complicated but the thing that has changed the most is the consumer and how they shop – ie the person who will buy your home. What worked 5 years ago doesn’t work now. We are living in a world of time poor people with a small attention span.
No matter what your selling these days the over rising things that we all want in a purchasing decision (whether its shoes or property) is :
- Transparency – Just tell me the price
- Timely information – Answer my calls
- Authenticity – don’t lie to me
So, you have one more decision to make and that is the selling method you are going to use to sell your home. It’s important to weigh up these options carefully so that you choose the best option for your situation. And with so many to choose from in the current market place and each agency pushing their own agenda it can be a daunting decision.
You need to remember that certain agencies have preferred sales methods and they will promote those over everything else, regardless of what may be good for your property specifically.
Just a few of the current methods being current promoted are:
- Private treaty
- Set date sale
- Expressions of Interest
- Open Negotiation
….just to name a few. It’s no wonder most people selling their home get a headache. So let’s take a quick look at each of the methods and discuss their pro’s and con’s.
In Western Australia, the most common way is through the system of Private Treaty. This method is based on advertising the property at an asking price and then negotiating with the buyer, through the agent, to secure the sale after some old-fashioned haggling.
Once an agreed of price and conditions has been reached, the transaction can proceed to settlement.
The benefits of this process from the seller’s point of view are that if you find the buyer in week one you can sell immediately and negotiate on any other terms such as settlement date and deposit. From a buyer’s perspective it is the easiest way to buy a house. There are no guessing games as to the price expectation and you are able to add any conditions you would like to include as part of the contract.
On the down side, if you have a property that is hard to price and the property has some unique characteristics such as views, heritage or development potential, you do risk underselling the home as coming up with a guide as to expected value may be difficult.
Auctions are growing in popularity in WA and are slowly gaining more of a following. They have long been the favoured sales price on the East coast and in many other parts of the globe. Although still not the preferred option for most sellers, auctions can be a good way to flush out the more serious buyers after a shorter marketing period and they can also be more convenient for the seller.
A successful bidder, having reached or surpassed the reserve price, must be able to provide a 10 per cent deposit at the fall of the hammer. The purchase is a cash unconditional contract with conditions attached to it. That means a seller must conduct the required inspections prior to bidding on the day. A process that is not cheap. However, more and more sellers are following the lead of the east coast and providing recent structural and termite inspection reports as part of the auction sales process.
From a seller’s perspective the auction can be a controlled process over a set period of time that allows for above market prices if they exist. They can also be a stressful nerve racking experience! There is also the additional cost of the auctioneer’s fee.
Buyers are either able to make a cash unconditional offer at an auctions or not. As many buyers still require finance approval, auctions will exclude some buyers from the process as they will not be in the financial position cash on the day. Nor may they have access to sizable deposits.
TENDER / SET DATE SALE / EOI
A third option for selling your property is to invite offers by a specified date. This is historically known as a tender process but also goes by other descriptions such as Expressions of Interest, Set Date Sale or End Date Sale.
Expressions of Interest might sometimes indicate a price range whereas Set Date and End Date sales usually don’t disclose price.
With these particular methods a property will generally be on the market for four-to-six weeks to allow potential purchasers to view it. If they are keen to buy, the agent will ask them to submit either a formal written offer or written expression of interest.
They are similar in nature to the auction process in that there is not a set price however research has shown that buyers generally are not fond of these processes and become frustrated by the lack of price guidance. They also lack the transparency of the auction process as you are not able to see what other buyers are bidding as you are able to do on the auctions floor.
This is a new entrant into the market and is a hybrid between auction and private treaty. It is causing some confusion among buyers but is a relatively easy process once you understand it.
The buyer presents his offer conditions to the owner for approval before the auction date for there approval. Once approved they can bid on the day. Bidding is done through a mobile phone app and the buyer can do it in the privacy of their own home. Each buyer can see every other buyers bid.
The biggest drawback is the drawn out time over which it is conducted. this risks losing your perfect buyer in the first or 2nd week as you are asking them to sit on their hands for a drawn out period.
The other disadvantage is that the buyer is sitting at home on their phone doing the bidding rather than negotiating with an agent.
Different market conditions and different homes require different solutions and methods. Before listing any property, you should discuss with your agent your desired conditions of sale, including;
- Settlement date
- Whether you will entertain finance or other conditions
- Inclusions and exclusions of the sale.
It is always a good idea to review how each of the sales methods has performed in your desired area and if there is a preferred process. Also beware of any agent who only pushes one particular method to sell your home. Often agents have their favourites and there are many ways to skin a cat. Each process has its advantages and disadvantages and it will depend not only on your home, but what you are trying to achieve, your time frame and the current market conditions.