To achieve the best price for your home, you need to choose the best sales method. We examine the options.
When it comes to achieving the best price for the sale of your home, not all sales methods are created equal. Whatever your type of home, the choice of how you sell it comes down to three major options: tender or deadline sale; sale by negotiation or advertised price; or auction.
Each method can result in a sale, and each has different pros and cons, but one delivers consistently better results. We take a look at each sales method in turn.
Tender or deadline sale
For many vendors, selling by tender or deadline is a choice that’s made for them by the nature of their property or its ownership.
If ownership of the dwelling involves a number of interested parties – for example a family trust – or the sale requires potential purchasers to undertake extensive due diligence, the tender process offers greater flexibility on both sides.
Daniel Coulson, Bayleys’ national auction and residential manager, says that from a practical perspective there’s not a lot of difference between a tender sale and a deadline sale.
“Basically, a deadline sale is really just a tender sale by another name,” he says. “Both of them operate over a similar period of time, and both of them give buyers a chance to make an offer by a specified date.
“It’s a process that favours a more complicated sales scenario, for example a convoluted trust sale that needs approval from a number of parties to make the decision as to whether an offer is accepted or not. It gives the decisionmakers a bit more time to seek outside approval.”
Sale by negotiation or advertised price
Nationally, a sale by negotiation is still the most common method of sale. You advertise your property with a price, and negotiate. It’s a simple process that allows for both buyers and sellers to easily add conditions to the sale, and it isn’t constrained by time deadlines, but there are disadvantages.
“In markets that are constantly moving, such as the major centres, then often it’s hard to make a decisive estimate on a property’s value,” says Daniel. “If you overprice the property, then you lose the impact you would have at the start of a marketing campaign. Though, of course, the much bigger danger is that you under-price the property.
“If you set a price, you’ve immediately capped the price that you could have possibly achieved for it, and risk selling it too cheaply, even if a buyer had seen the value of the property north of that level.”
In August, for the seventh month in a row, Gisborne saw the most house sales by auction, with nearly 40 percent of properties going under the hammer. It also saw its median house price hit a new record of $335,000 – up 43 percent over the past year. According to Coulson, the two sets of figures are not unrelated.
“If you sell by auction, you’re putting buyers into a competitive environment and there’s an urgency to the sale,” he says. “At the moment, some markets are lacking a little bit of confidence, and when buyers see other people bidding against them, it reassures them that they’ve made the right choice on a desirable property, and that other people want to own it, too.
“From my point of view, my job as auctioneer is simple: it’s not to deliver a sale, or a price, it’s to deliver the opportunity to sell, and auctions still have a higher success rate than any other method of sale.”
As the spring market continues to build momentum, if you’re thinking of selling, talk to the experts at Bayleys who can help you choose the right sales method for your home and maximise its sales price.