When it comes to buying and selling property, the two main options you can choose from is using general market sales or property auctions. Everyone’s situation differs depending on the circumstances of the purchase or sale. Therefore, it is essential to consider a couple of factors to determine the most suitable method that best suits your current situation.
Firstly, think about your time constraints. Selling a property through the general market traditional sale can sometimes take longer due to processes and potential buyer’s mortgage approval wait times, amongst other reasons. On the other hand, a sale at auction is more definitive; on the fall of the hammer, the winning bidder is obligated to buy. Thus, if you need an immediate transaction, then auctions could be more suitable.
Also, consider your financial situation carefully. If you’re not in desperate need to sell fast and are willing to hold out for higher offers just above market value, then selling via traditional methods may suit better as it provides room for price negotiations with potential buyers.
Next up is assessing market conditions in your area: some properties do well at auction, particularly when they’re rare or highly desirable in a sellers’ market where property demand surpasses supply.
So, there can be considerable differences between both methods, thus checking out and understanding each process is a good starting point. It will help you ascertain the method of getting you a reasonable price – whether buying or selling.
This article looks at some basic differences between your general market sales and online property auctions.
Exposure and Reach
One difference between the two sales methods lies in their marketing reach. Traditional markets usually target a somewhat exclusive, local audience using various channels. Online property auctions, however, tend to have a nationwide exposure effect which means that interested buyers from all corners of the country to potentially engage with your listing.
Property listings are added to popular property search websites such as Rightmove to reach a broad audience as part of the marketing strategy. In contrast, most auctioneers take benefit substantial database of interested buyers who are instantly alerted when new properties become available for bidding. On average, properties are listed on a website 4 to 6 weeks before the auction date. This allows the property to build interest and put to market before the auction begins.
Speed of Sale
When dealing with general market sales, the buyer makes an offer, waits for acceptance, conducts their due diligence, and then exchanges. However, there is not any fixed timescale set for exchange or completion. In contrast, auctions offer a fast-paced and transparent experience where buyers can bid in real-time. Once the hammer falls during an auction, the complete sale process is usually concluded within 28 days following the auction.
Certainty of Sale
Similar to speed of sale, auction delivers a legally binding sale. Once the hammer fails, a binding contract is created at auction, the buyer has to pay a 10% fee deposit, so neither party can pull out of the sale or try to renegotiate the price. Thus, the success rates from auction through to completion are far higher than with traditional general market sales.
Pricing strategy
General market sales are offered with an asking price for the property, while property auctions start with a guide price. An agent will normally in most cases suggest a higher price for the property and ask buyers to make offers at or below the asking price. As such, if you make an amount close to what the agents are asking (above or slightly below the asking price), they might accept your offer. If agents have not received any other competitive offers, then they may also advise the seller to lower this asking price, to create more interest from buyers.
With a guide price set, this is usually a lower price that aims to encourage potential buyers to bid It is worth noting that the guide price is generally set below the property’s market value, and it is normally an indication of the minimum amount a seller hopes to achieve. The level of interest in the bidders sets the property’s price, and not precisely the guide price. Therefore, it’s still the competitive bidding process, which helps drives the property price up to achieve the final selling price.
What’s The Best Method?
Based on the above key differences, it all boils down to your priorities and what approach provides you the most comfort. Focus on striking a balance between the strategy, and the buying process, while keeping in mind that the timelines also differ.
It mainly depends on the specific requirements and circumstances of your situation. Factors like speed, convenience, cost-efficiency, and flexibility can greatly influence this decision-making process. At times going with one approach might seem more beneficial, but it’s important to note that each has its own set of advantages and disadvantages.
If you prefer a straightforward buying process without hidden charges or complications, then opting for a transparent pricing strategy might be suitable for you. Always consider your financial status before making any decisions, ensuring it falls within prudent risk tolerance level, hence maintaining financial stability and security. In conclusion, each method is relative to your goals for what you need and want, neither option is inherently superior over another when choosing how to proceed in such transactions.
