Selling a home, especially in a cooling market, is a daunting task.

Plans need to be made, closets need to be cleaned, but the biggest dilemma is often whether to sell via auction or take your property to a private sale.

At the end of the day, both the vendor and the seller want the highest price and the decision on how to sell the property can impact the outcome greatly.

Arch Staver, sales director at Nelson Alexander, says the choice to take a property under the hammer is really based on how much interest you think will be out there.

“Look it depends, it’s property specific. Not every property lends itself to a competitive scenario,” he told The New Daily. “It depends on the popularity on the house, it’s a matter of understanding how your property would perform in an auction and that’s the agent’s job to give you that advice.”

The properties features, the location, timing of the sale and strength in the market are all factors which influence how much competition it will garner.

And competition is key to a successful auction, says Mr Staver.

“One property I’m auctioning tomorrow morning, we have six people who have shown serious interest – auctioning it is the best way to sell it because then it has a chance of fetching above the reserve.”

In the auction process the agent helps the vendor set the reserve price, they market the property and ideally, create enough serious buyer interest to ignite a bidding war.

If a successful bid is even $1 over the reserve, the vendor must accept it.

Kial Jarred from Xynergy Realty says that the uniqueness of a property is another key factor in deciding if a property should go to auction.

“An auction is the best way to achieve the best price if the property is unique and in high demand,” he told The New Daily. 

“With buyers more willing to pay a premium price for properties that don’t come on to the market that often. This creates urgency and a fear of missing out which encourage competitive emotional bidding.

“With that in mind, an agent will typically recommend a private sale when the property is not unique, and when there is not enough competition to warrant a bidding war.”

The perks of the private sale

A private sale is when the vendor sets the price and the agent negotiates with interested buyers. While not public, the process can still be competitive if there are multiple parties interested.

The positives of a private sale process are that it’s far more flexible and potentially opens up the sale to a larger demographic of people, says Wakelin Property Advisory director, Jarrod McCabe.

“It depends on who the buyers is, if you’re looking at first home buyers as the key candidates, a lot of them take instruction from the bank of their broker, subject to finance which you can’t do with an auction. So an auction potentially rules out those prospective buyers.”

Choosing an agent

A good agent will way up if there’s enough competition to go to auction, help set the reserve price and design the campaign.

Sellers need to do their research in order to pick the right agent, and vendors need to look past just the commission cost, Mr McCabe argues.

“You need to do a lot of research and have a clear understanding of experience. Have they sold similar properties? What other properties have they sold via selling in the way they’re suggesting?

“Have they only done auctions and that’s why they’re saying to sell it that way? Getting a clear understanding and speaking to different agents is a start.”