If you’re new to the property world, you might find yourself confused by the various different forms of sale. Buying or selling, it always pays to ensure you know what you are getting yourself into before getting your heart set on purchasing a particular property.
To that end, we’ve put together a short guide to the three major different forms of selling property you are likely to encounter on your real estate journey.
This form of selling a home involves competitive, open-cry bidding.
One of the most popular forms of sale for property in Melbourne according to CoreLogic RP Data, this form of selling a home involves competitive, open-cry bidding with the assistance of an auctioneer. Once the reserve price (the lowest amount of capital the vendor is willing to accept) is met, the highest bidder becomes the buyer.
Auctioning is vastly different from its cousin, the private sale, in that it is far more competitive and relies upon this aggressive atmosphere to achieve the best results for the sale.
CoreLogic describes how this method is particularly apt for higher-priced properties – median auction results for houses hit $950,000 in 2015, while the median for private treaty was only $530,000. Speedy sales are also part of the formula for auctions, as Properazzi describes how, over one month, two thirds of property were auctioned only three weeks after their listing date.
Private sales are a more reserved process than auctions, in which the buyer negotiates a sale with the vendor directly, sometimes with either party (or both) having an agent as an intermediary. Houses are listed for private sale in a number of ways, whether it is advertised as offers over a certain amount or pure negotiation.
Private sales can take a little longer than auctions. CoreLogic reports the average number of days on the market as 41 for houses for sale and 35 for units in September 2014. However, Private sales are far more common and sellers may be more comfortable with them, depending on your area and local market.
The most unusual of the three major sales types, tenders combine factors of both auctions and private sales. During sales by tender, a buyer writes down their offer, puts it in a sealed envelope and gives it to the vendor. Other interested buyers do the same. The vendor then opens these all at the same time and picks the best one.
This method of sale is effective for properties with particular unique features that will attract specific buyers, but perhaps not the number required for an auction.
Now that you have armed yourself with this knowledge, go out and find the right property with the right sales method for you!