A guide for buyers and sellers
Making sense of the different selling methods can be a mind field for some, especially those who have not brought or sold property for some time.
The following provides a quick guide to the three main styles of sales.
The owner in conjunction with the agent sets a nominated price for the property. The price is usually a reflection of the current market value and openly advertised to the public along with a robust marketing campaign to showcase the property. Which can be achieved with property staging, professional photography, multiple home opening and brochure etc.
Buyers put forward an offer to the agent along with any impelling information that could assist with their proposal being accepted, (e.g. home loan agreed subject to valuation, settlement date etc.). The owner may decline, or accept the offer, or enter in to further discussions until a price has been agreed upon.
Once agreed, time is of the essence to exchange contracts for both parties. It is important to note that the agent has a fiduciary obligation to inform the owner of offers that have been put forward by other potential buyers. The seller may or may not choose to accept another offer due to, increased price, or for the other potential buyer to exchange contracts sooner than the current prospective buyer.
A building inspection report on a property is sourced before marketing the property in the ACT and forms part of the viewable contract provided by the agent upon request. In NSW, this can be sourced before exchange but can increase time in exchanging contracts. Contracts may be subject to conditions and a cooling off period (depending on State & Territory).
There is no set selling price when a property is listed for auction. An auction is the process of offering a property for sale in a public forum by a licensed auctioneer, after a designated time period consisting of a well-structured and high impact marketing campaign. Prior to the auction the in conjunction with the agent the owner will set a reserve price.
For a potential buyer to bid they must first register with the agent prior to the auction. The auction can commence with an opening bid below the market value or reserve price, which will generally increase during the bidding process. When the reserve price is met, the property will be announced as officially on the market. On the fall of the auctioneer's hammer, the property is sold to the highest bidder. There is no cooling off period, the deposit is paid, and contracts exchanged with immediate effect.
Prior to auction offers can be put forward and accepted or declined by the owner. The property can be withdrawn from auction.
If the property does not sell at auction, the auctioneer will pass it in and enters into private and exclusive rights of negotiation with the highest bidder. If an agreement is still not reached, the property may be marketed using an alternative method of sale.
The sense of competition among buyers on auction day often means that the property can achieve its optimal market value. However, auctions are not for every home sale as they are particularly effective in competitive markets where there is a lot of buyer interest.
Expressions of Interest
The property is advertised as EOI or ‘Expressions of Interest’ during the marketing campaign. Buyers will submit their offer in writing to the agent by the nominated specified time and date set out in the marketing campaign along with any compelling information that could assist with their proposal being accepted, (e.g. home loan agreed, subject to valuation, or more desired settlement timeframe). All offers are confidential, and the seller has control over the process including the right to accept an offer prior to the closing date.