In this buoyant market, selling via a non-fixed price marketing strategy such as Tender or Auctions is a highly recommended sales strategy. With multiple buyers and not enough listings to meet the demand, the competition that is created by Auction or Tender means that the sales price is uncapped and the market dictates the price.
So what is the difference between the two selling methods?
Selling a property at Auction is an open process where buyers bid against each other to purchase the property. You set a reserve price before the auction and once this price is reached, the highest bidder becomes the successful buyer.
Auction is great because it encourages motivated buyers and motivated sellers. Come auction day you know the property is on the market and going to sell as it reaches reserve price set by the vendor. To bid in the auction room, buyers have to be cash unconditional, so you know you are working with buyers who have done all their due diligence and are ready to purchase on the day.
The process of an auction room is extremely transparent which is appealing to both parties. For the Vendors, the combination of the hype of the auction room, the skill of the auctioneer to encourage a higher bid and the competition between buyers means that a higher price is often achieved. The vendors can set the reserve, settlement date and conditions and the negotiating is done by the auctioneer, who has the ability to negotiate with more than one buyer on the floor. For purchasers it is an open forum where they can see the competition out in the open and place their bids accordingly, rather than taking a guess at where the competition sits.
A tender is a method where buyers submit confidential written offers for your property by a certain date. Offers can be accepted prior to the advertised close date, but this must be made clear in the advertising, - listed as (unless sold prior). There is no reserve price, but there may be a price guide.
Many of the advantages of auctions also transcend into tenders, such as the uncapped potential of a sales price, competition between buyer and the fact that it creates a finite end date, unless it is an open tender whereby vendors can accept offers presented before the deadline date. Vendors who prefer a more private method, where offers are opened and decisions made behind closed doors, often opt for this method of sale for their property. Tenders also give those who have conditions on their buying, or the first home buyer who have Kiwisaver clauses, to put an offer forward.
A big advantage to the tender process is that because buyers are placing offers without seeing what the competition is offering, there is the potential to obtain uncapped results and fantastic sale prices.
Both sales methods in this market are effective and work well to achieve premium results.