The Basics of Auctions and Private Sales
There are two methods of sale for residential property in Victoria: public auction and private sale.
Making a choice between the two is best done in conjunction with your real estate agent. After all, you have employed them to sell your home and they have developed a high degree of professional expertise from which you can benefit.
There are, however, some core features of each method which you need to be aware of.
Public auctions are held at an advertised time and place. This means the price you will receive for your property will be determined in a transparent manner by bids made in public at your auction.
A private sale is different. The price at which your property will be sold is determined by negotiation between your estate agent and potential buyers. The negotiations will take place in private.
There is also another important difference between a private sale and a public auction of residential property.
If you sell privately, within three business days of signing a contract your buyer is allowed to change their mind, ‘cool-off’ and cancel the sale. But, if you put your property up for auction and it is sold in the three days leading up to, on the day of, or within three days after your public auction, your buyer cannot ‘cool-off’.
The use of auctions fluctuates in line with the market. At times when the market is not delivering strong price growth they comprise around 15 to 20 per cent of all sales in the metropolitan area and when it is strong they can account for between 20 and 30 per cent. Auctions are also used in regional areas, but on a very selective basis.
The sales method chosen differs across Melbourne. Auctions are more prevalent in the inner city that the outer suburbs. The REIV website has maps demonstrating this on a suburb by suburb basis allowing sellers to undertake some of their own research.
The overall state of demand in the auction market is generally measured though the clearance rate statistic and whilst it is a very useful guide it can’t replace attending an auction and watching the bidding if you are looking to buy or sell.
Courtesy of REIV.com.au