If you’re looking into property in our region, especially if you’re relocating from somewhere like Melbourne or another major city, you’ve no doubt noticed private sale is the norm. But have you ever wondered why?
In a fast moving market like Melbourne where properties sell quickly and demand is high an auction is ideal.
Vendors are banking on strong competition on auction day pushing the sale price up. Buyers are hoping they’ll snag themselves a bargain. There’s a sense of overall urgency because the campaign has a set end date (auction day) and everyone is compelled to make a decision on the day.
So basically, strong market, lots of competition, more auctions.
Regional areas where demand is not quite as high and properties tend to move more slowly are better suited to private sale and there are a number of reasons why.
“Auctions are competitive,” says Waller Realty Agent, Tom Robertson. “For a vendor this can mean the property sells for more than the expected value. This sounds great, but in a small community there’s a downside”.
“In the country, people don’t like to bid against their neighbour or their friends,” says Tom. “With a private sale, buyers are less likely to know who else is interested and specific details can be kept out of the public eye. This makes everyone more comfortable.”
Another reason auctions tend not to be so successful in regional areas has to do with the length of time properties are likely to sit on the market before they sell.
In an auction when the hammer goes down the deal is done. The sale is unconditional, there’s no cooling off period and the contract is signed on the day.
“This works in a market where a buyer can purchase a property and reasonably expect they could sell their own quickly, ideally within the standard 4 – 5 weeks of an auction campaign,” says Tom.
“If you know you’re going to be able to sell your own place quickly you’ll bid with confidence.”
In the country the average time on the market is longer, around 120 days, and offers are more likely to have conditions: extended settlement periods, subject to finance or the sale of the buyers own home, so unconditional sales are far less common. Generally, conditions are much better suited to private sale.
According to Tom one of the common misconceptions people have about auction vs private sale is that at auction you’re likely to pay over the top of the range and for private sale you’re likely to pay less.
“This is not necessarily the case,” he says. “A private sale is just as likely to go up if there are several interested parties.”
It’s quite normal for another buyer to come in during a private sale negotiation and push the price up, not unlike what happens on any given Saturday at an auction in any street in Melbourne.
“Ultimately, the onus is on the buyer to get the contact signed and back to the agent. The sale is only final when the vendor signs whether it’s an auction or a private sale,” says Tom.
Like to know more about buying or selling in our region? Speak to one of our agents or call the Waller Realty office in Castlemaine on 03 5470 5811 or Maldon on 03 5474 1055.