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Deciding which method of sale to adopt when selling your home, has become more difficult.
In a booming market like 2007, the number of homes sold by auction spiked to about 30 per cent of all Victorian homes sold - making ground on private sales, which are still the most popular method of sale.
Auctions however weren’t always successful, with agents in the inner and middle ring suburbs citing plenty of examples of vendors forced to take prices achieved at auction, which were often tens of thousands of dollars less than offers received privately, prior or during the campaign.
Here’s a list of sale methods available, and how they work.
Private Sale
Private sales are most popular in middle and outer ring suburbs where competition for stock is generally less manic than for inner-city properties.
Relatively straightforward, prospective purchasers are aware of a vendor’s asking price, and make an offer based on that. As well as price, prospective purchasers can negotiate on deposit and settlement terms, which often sweeten a deal.
Buyers are also given a “cooling off” period, giving them three days to withdraw their offer for any reason.
Private sales are also preferred by vendors who may not wish to have their home openly inspected to masses of people, as is often demanded in an auction-based marketing campaign.
Public Auctions:
Emotion charged, frustrating - and not always as transparent as they should be - auctions are a popular sales method for homes within a fifteen kilometre ring of the city.
Here, prospective purchasers bid for a property on a set date, openly against other bidders.
An auction usually follows a five week marketing campaign whereby the property is widely advertised and open for inspection at least once a week.
Any building reports and inspections need to be carried out by prospective purchasers before auction day, and sale terms- such as deposit, or settlement terms, are set by the vendor.
Sale By Set Date
Using this method, prospective buyers lodge one “best offer” bid, based on an advertised quoted selling range.
The “set date” is typically five weeks after a marketing campaign commences, and properties are usually open for inspection, in the same way they are at auction.
If the vendor is unhappy with the offers received – negotiations can reopen with the bidders.
However there is a grey area over the legitimacy of offers. Agents are not required to record offers to anybody other than the vendor, so prospective buyers are never aware who they are bidding against, if anybody.
Expression of Interest
In a residential expression of interest campaign, prospective buyers make an offer for a property based on their own calculation of what a property is worth. Vendors do not need to disclose a price, or a date any campaign will end.
This method increases the risk of over-paying by a prospective purchaser, if they do not have a firm grasp of the likely value of the property.
Boardroom Auctions
Popular for properties where intense buyer interest is expected, a boardroom auction works similarly to a public auction whereby bidding is conducted during a meeting with all interested parties.
The three day “cooling off” period prospective buyers receive with a private sale is waived if all bidders have taken prior legal advice.
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