Auctions have been used as a method of sale for property for hundreds of years. In New South Wales, variances with contracts and how offers are presented mean that auction provides an unconditional means to secure a property without risk of the buyer missing out.
In Queensland the laws are slightly different, but auction does have its place in the market. Brisbane and the Sunshine Coast are big proponents of the auction method as opposed to private treaty. In Central Queensland, there has often been resistance around auction for two main reasons; familiarity and the connotation that it is primarily for mortgagee sales. However, the winds of change are upon us in the regional property markets. Demand for property is rising as rental vacancy tightens and buyers take advantage of record low prices and interest rates. Private treaty does have a place in the market for certain properties, but there has never been a better time than now to consider auction as your preferred method of sale.
What is Auction?
An auction is a public sale that happens at a specific date, time and place. Prospective buyers need to register on the day and place a bid for your home in public while the auction calls the auction. Once the hammer falls, the highest bidder must sign a contract (without conditions) to buy home at their offered price. Once the reserve has been met, the auction will call that the property is ‘on the market’. There are serious penalties if they cannot finalise the sale at settlement.
Benefits of Auction
The benefits of selling by auction for a seller include:
- An unconditional, 30 day contract
- Deposit paid on the date of the auction
- Clear marketing plan and due date
- Auction properties are likely to sell either under the hammer or shortly after given the intensive marketing campaign and pricing feedback received to better educate both seller and agent on the market
What is Private Treaty?
A sale via private treaty is when a property is listed for a specific price. Typically, the buyer controls what offers are given and the seller will counteroffer. When there are more than one interested buyer tabling an offer, this constitutes a multiple offer situation. Negotiations are done privately and offers aren’t disclosed to the competing parties. Private treaty doesn’t have a due date per-se whereas an auction has a due date, being the date of the auction. The risk with private treaty is that days on market can be extended while a seller waits for a buyer to make an offer. The exception to this rule is in a seller’s market where there is high demand from buyers.
If you’re thinking of selling or have a property on the market, it might be time to explore your options around method of sale. An experienced, suitably qualified agent will be able to discuss both options with you so you can fully assess what is best for you and your property to effect a sale.