Vendors Ask: Auction or Deadline?
As the market continues to rise, property owners thinking of selling might be wondering what sale method they should choose to ensure they get the best possible price. Two sale methods are proving popular with vendors in this market – deadline sale and auction. Which one would be right for your property?
Both methods can have excellent results. There is one very basic difference between the two: an auction is an open bidding process, while a deadline sale is a closed offering system in which buyers don’t know what other buyers are offering.
An auction marketing programme usually takes three to four weeks and vendors should allow for a strong marketing budget. This sale method is best used when it’s known there will be multiple buyers in an unconditional position. An advantage of this sale method is that the vendor knows the property is sold on the fall of the hammer. The marketing will help establish where buyers see the property and on the day of auction, or the day before, a reserve price can be set.
One disadvantage to auction is that conditional buyers are excluded from taking part in the bidding, though they might enter negotiations if the property fails to sell at auction. Another is that the best buyer knows what the competition is willing to pay and only has to offer slightly above it, once the reserve price is reached. For more information on buying or selling by auction see the following links:
Deadline sale is a much more popular current method of sale. At Nidd Realty, the vast majority of sales are through this method. A deadline sale simply sets a date and time by which all offers must be made. The timeframe is now commonly after two or three weekends, during which buyers can carry out due diligence in order to offer simply. During this time, vendors will be given reports on the price level buyers are seeing the property. Offers can be conditional, so the method is more inclusive from the outset than auction. The deadline creates a sense of timeliness, so buyers are less likely to procrastinate. It also gives time for more than one buyer to be found.
Most importantly, all offers at deadline are kept confidential so no buyer knows what another is offering. Buyers are encouraged to make their best offer and all offers are presented at the same time. Competition often results in an excellent top offer a good margin over the next best. If no offers are received by deadline, a price can be set according to market feedback.
Both sale methods can allow for prior offers to be made, but this must be made clear from the outset of marketing. In a hot market, most vendors will be advised by their agent to go to deadline or auction. That is certainly my advice. Although occasionally an impatient buyer will be lost, invariably they are not the best buyer. So while there is no perfect answer for every case, a well-informed property consultant will be able to guide you to the best sale method for your property.