Tuesday, March 16, 2010


Outside of "How much do you charge?", the question of Auction versus Private Treaty is the most common. There is a great deal of misunderstanding of the two methods of sale and it is true that the vast majority of agents couldn't tell you the pro's and con's of either method.

Firstly, you have all heard about Auction clearance rates, this is the percentage of Auction properties sold before or on the day. In Sydney this has been averaging around the 70% mark since Christmas. Of the remaining 30% approx half will sell with 7 days with the final 15% requiring additional marketing and more commonly a price reduction. So we can say with confidence that 85% of Auction properties sell within 35 days with the vast majority selling in 28 days or less. With private treaty sales, it is never reported how many days they spend on the market. However my statistics consistently show that time on market for Private treaty sales is on average 60 days. In fact the average for Mona Vale is 93 days. Thats more than double. Thats twice as much cleaning, twice as many mortgage payments, twice as long bridgeing finance and twice as many open houses and private inspections, and twice as long media marketing campaigns.

Secondly, it is also a common belief that Auctions are dearer. Personally I believe in marketing all properties to the vendors budget, whatever that may be. There is no point telling everybody you got the best price when half the buying market didn't come thru your home. You will have all seen both Auction and Private Treaty properties advertised in the print media. The only true cost difference is the Auctioneers fee of approx $400.

Thirdly, there is a myth out there that if you put a high price on your property, you might just get it. Let me put this scenario to you......your a buyer, looking for a new TV. You've been shopping around looking at which brands have more features like multi AV ports, HD ready, digital reception, attractive stand etc. Those that you like are all priced betwen $2000 and $2250. Then while your out looking on a Saturday morn, you see a TV that is $2950, yet it looks just like the others, has the same features, is the same colour, does the same thing......would you buy it or would it just re-assure you that the other TV is better value and that it would be a smart decision to buy the other one because that shop is greedy and just wants to much.

Accordingly, if you chose Private Treaty you need to price your home according to the competition so as to attract buyers to your home. This is always difficult because you dont want to underprice it because nobody will pay more than you ask but you know if you overprice it you will force the buyers to your competition. If you chose the Auction method you can be flexible with your price, allowing you to attract many more buyers who you feel once in your home will connect with it and become attached and then negotiate beyond what they were willing to spend when they woke up that day. Essentially Auction is Private Treaty with a deadline.. it allows you total control over the marketing, price setting and final aceptance. It allows you to sell prior, on the day or afterwards in negotiation and it guarantees an unconditional sale, not one subject to Building and Pest inspections or finance approval.

Fourthly, I hear this all the time. "I wouldn't buy at an auction so people wont buy this at Auction". I sell 70% of my Auction properties prior to Auction, for exactly that reason. Alot of buyers will negotiate prior to avoid bidding, this is in the vendors advantage.

To discuss in more detail the benefits and drawbacks of each method you can call me directly on 8914 3215 or leave a question in the comments section and I will respond.

PROPERTY OF THE WEEK - 1 Malcolm St Narrabeen - $1.76m

This property is incredibly unique. 164 sqm of cafe, but zoned residential. It comes with a 3 bedroom house to the rear and also a granny flat which was the garage originally. An Icon on the Narrabeen peninsula, it is returning $113,000 in income and is available for inspection by appointment. Call me for further details on 0411 420 100

John McGrath has issued his Autumn Market Review. Read it online - Click the link below


If you found that interesting and would like to read more from John follow the link below to his personal blog


Haven't made it your local cafe for this weeks McGrath magazine. Read it online - click the link below.


Thanks for reading this weeks BLOG. If you or anyone you know is interested in knowing the value of their home or is considering going to market in 2010, have them call me. It is easy to make a mistake in this area and advice is always free.

See you at an open home.

Regards Steve

T 8914 3215 M 0411 420 100

E stevenpurcell@mcgrath.com.au

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