Private Sale Vs Public Auction: Which Is Best?

Selling a home is tough enough without the added stress of not knowing how to sell. Auctions are for people who want their property sold as soon as possible, while private sales take longer but give sellers ultimate control over more of the sale process. Your choice can make all the difference in whether you find an interested buyer or have trouble selling your home.

It can often feel like one big guessing game when deciding between selling privately vs at an auction. Does more time on the market ensure a higher chance of success? That depends largely on where you’re starting from. So contemplate figuring out your priorities first. 

A big factor to take into consideration is how the local market is performing. Look at how other similar properties have performed in the suburb you’re selling in. Your local real estate agent should be able to look at all the recent sales and stats to help you make a more informed decision.

To help make your decision easier, we’re breaking it all down for you. We’ll look at the pros and cons of both options to help you make the best decision. When you learn more about the options you have with both selling methods you may discover some hidden benefits you hadn’t thought of before.

Selling with a public auction

A public auction involves interested buyers bidding on your property. This usually occurs at the property itself where buyers have the chance to inspect your property one last time before competing against other bidders. For an auction, there is no guarantee the purchase of your property will happen on the day unless the bids match or exceed the reserved price you’ve chosen as the seller.

The reserve price is the minimum price you’re willing to let the house sell for at auction. Your dedicated real estate agent will help you decide on a reserve price that’s realistic and in line with recent results for the suburb you’re selling in. When bidding for your property reaches the reserve price, it’s officially on the market. This means you must accept whatever price your property will sell for at auction on the day. There’s no turning back.

If the bids on the day don’t reach your reserve price, the property is officially ‘passed in’. This means that your property can no longer be sold at auction on this day. From here you can choose to sell your property on a different date with another public auction or you can choose a private sale instead.

Pros

• Auctions provide you with the flexibility to sell your property prior to auction, on auction day or negotiate pricing if your property is passed in
• You can choose the reserve price to ensure the property isn’t sold for anything less than what you wanted
• You get to choose a settlement date that suits you. This can allow you plenty of time to move out or help speed up the process if you’re ready to vacate the property asap

Cons

• Auctions rely on large and expensive marketing campaigns to attract enough potential buyers to inspect your house and bid on auction day
• If your property is passed in it can put off potential buyers who now probably assume your reserve price is too high for them
• Even if you’re property is really likeable, the nature of an auction can stress out some buyers and put them off bidding on your property

Selling with a private sale

This method of selling your home can be a lot less complicated and stressful when compared to a public auction. During the sale process, you can still choose to use a real estate agent to market the property and take care of all the arrangements such as booking inspections. Over the period of time your property is listed, your real estate agent is contacted by potential buyers who put in their offers. Your real estate agent then gives you these offers to choose from. 

When all the offers are on the table it’s up to you to decide on the best one. During this process, you can advise the real estate agent to adjust the asking price or send out offers for expressions of interest which can further drive the sale of your property. New offers may come in that are closer to what you have envisioned for the property.

Cons

• It can be more difficult to set inspection times for your property. This could leave you having to make your property available at inconvenient times for potential buyers to inspect
• You may end up choosing a selling price that is too low when an auction could have gone higher
• If you choose a sale price that’s too high then you risk not selling your house for e=several weeks or months
• A cooling-off period is usually included in the contract of sale for a private sale, giving your buyer the option to pull out of the purchase if they change their mind

Pros

• Without an auction day or deadline, you can afford to take your time and wait for new offers to come in for your property
• Potential buyers who express interest in your property are usually more genuine than those who inspect your house when it’s up for public auction
• During negotiations for a private sale, you will also have more flexibility over contract clauses 

Choosing the best option for you

Still finding it hard to choose the right property sale option for you? Try and take a survey of your local area. How are other homes in your suburb being sold? This can be a good indicator of what could work better for your property. Sometimes it doesn’t matter how much you invest in marketing, the potential buyers you want to bid at auction simply might not be out there at the moment. 

While you’re making your decision, ask your real estate agent for case studies for their past public auctions and private sales. See which ones performed better and it may give you a better insight. At the end of the day, you need to make sure you’re fully aware of the real estate agent fees, costs and risks associated with both options. What you want is enough information to make a more informed decision. 

Just remember that public auctions can be very emotionally charged. There’s a lot more pressure involved which can sway you to make a decision you weren’t originally planning on. So try and make sure you are emotionally prepared to make one of the biggest decisions of your life leading up to the day of an auction. Rehearse your plan over and over again in your head and with a partner if you have one to ensure everyone is on the same wavelength. 

Whichever option you go with, try and be comfortable with the decision you make. Understand all the requirements of the sale method you choose so there’s no last-minute doubts or confusion. Even if you’ve sold properties in the past using one method it doesn’t necessarily mean it’s the right choice this time around. Again it all comes down to factors such as the type of property you have, the suburb you’re in, the time of year and even the economic climate. 

Get professional advice on the right selling method for your home. Ask the real estate experts at Vendor Advocate Melb today.

Questions? Contact Us.