Deadline Sale, Tender, By Negotiation, Auction; WHAT ON EARTH DOES ALL OF THIS MEAN?
Deadline Sale, Auction, Tender, Price by Negotiation (PBN), Set Sale Date, Buyer interest above $400,000 – What on earth does all of this mean?! Sometimes as agents, we forget that the terminology we use can often be very foreign to people. In this article we will briefly explain these sales methods.
Selling your home is not as simple as getting an opinion on a possible sale price and then putting it on the market if you really wish to get the best money you can. After all, you’ve probably worked very hard to earn the money to be able to invest in your home or investment property. Why would you sell yourself short and give someone else a portion of your nest egg - who’s probably not even related to you. It’s your money, and it is important you get the right advice to ensure you achieve the best possible price.
Selling a property is a marketing exercise first and foremost. The price you achieve often depends on the marketing method, and, the skills of the agent. Different movements in the market can also have a huge effect on the final result.
In an active market like we currently have in Hamilton, Sale by Deadline Treaty or Set Sale Date is definitely worthy of consideration. This is a lot like a Tender, where the agent sets a date and time in which all offers will be presented to the Vendor. Offers can be conditional or unconditional. The timeframe is somewhere between 7 to 20 days before the deadline closes. This often allows ample time for purchasers to do things such as getting their builders through, consulting with their lawyer, getting a LIM, sort their finance or even just get a family member to have a look. In my experience we often see a large variance in prices and conditions on the deadline day. The great thing about deadline sales and Tenders is, no one knows what the other is willing to pay, so often the variance between the highest and lowest offer can be quite substantial. I recently had 13 offers on a property where the difference between the highest and lowest offer was a remarkable $121,000.
If you have a definite date you need to sell by and you’re prepared to ‘meet the market’, an Auction is likely to be a good option. I do believe agent competence has a huge influence on the outcome of an Auction. If you choose to sell by Auction, don’t be afraid to ask your agent if this is something that they feel completely confident about doing. The idea of an Auction is to create competition and in doing so; push the price up. If there is competition, people tend to bid a little higher than they intended – they get caught up in the moment. If your reserve is met on the Auction floor – you’ve SOLD - because all bids are unconditional, cash bids.
Price by negotiation: I personally feel this is always the worst method to use. If you don’t want to Auction or have a Deadline Sale, put a price on it. In my experience of nearly 20 years in the industry ‘By Neg or offers’ attracts far less buyer enquiry than any other sales method.
Putting a price on it: This is a very traditional sales method – How can you be sure that you are getting the best price for your hard-earned asset? If you do price it in this hyped market – price it with a slight premium. If it is priced right and is a property that is likely to have a wide buyer pool, it is very likely you will achieve multiple offers. We are receiving multi offers on almost all priced listings at the moment.
The cost of selling (commission) differs between companies. At the end of the day, we compete for listings and all offer different deals. With an asset as big as a property, we always tell our prospective vendors to choose their agent based on who they 'gel' with (who feels right for them). We suggest listing with an agent who you feel you can be open, honest and comfortable with. Choosing the right agent can make all of the difference between a positive and negative real estate experience.
The method of marketing can often incur an extra fee over and above the commission payable, but these are always optional costs. This can be for extras like newspaper advertising, photography, internet feature ads, flyers, and perhaps a charge for an Auctioneer if you choose to Auction. These are often much more inexpensive than most people think they will be and, well worth the ‘spend’ to lift your property above your competitors. We currently have an incredibly special package for Deadline sale and Auction listings. Jess and I are more than happy for you to give us a call to give you a guideline on what you would expect to pay if you are considering selling. We are always happy to chat.