Auction
Auctions are a great tool to use if you are listing your house in a seller’s market. As the owner you can also decide to accept pre-auction offers if a buyer chooses to make one.
Price is determined by competitive bidding between prospective buyers present.
The contract in unconditional. The buyer cannot make it subject to conditions such as finance or inspection.
Pros and cons of Auction:
PROS
Flexibility: As the property owner, you have the flexibility to set the settlement date and terms to suit you, such as ensuring that it yields an unconditional sale.
Competition: Auctions create a sense of urgency based on a set ‘end date’ for the property, and this competition can often lead to higher bids and a higher sale price.
Protected by the reserve: If you decide to sell your property via auction, you are protected by the set reserve price, which represents the lowest offer that you’re willing to accept. This means that your property will not sell unless a bid is equal to or greater than the reserve price.
CONS
Higher costs: Most auctions require a higher marketing budget, and you are responsible for covering these costs, even if the property doesn’t sell. You’ll also need to pay an auctioneer and real estate agent to facilitate the transaction.
Rule out buyers: Due to the public and intimidating nature of auctions, many buyers may favor a private treaty over an auction. As bids are typically unconditional, auctions may also eliminate prospective buyers who are unable to obtain pre-approved finance to complete the deposit.