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auction vs private sale

Discussion in 'The Pub' at netrider.net.au started by carri27, May 13, 2007.

  1. private sale

  2. auction

    0 vote(s)
  3. donate all your assets to the needy and become a monastic

    0 vote(s)
  1. hey all, another thread regarding tips on house-buying has prompted me to post.

    we are looking to sell our flat and buy a house. another girl who lives in our block has expressed strong interest in buying our flat privately. i got a quote from one real-estate agent who kindly gave me a 'private sale price' and 'what you'd expect from an auction price'. the latter was $10,000 greater than the former. i would want to get another two quotes and average them out to be fair to both her and us.

    clearly the benefits of a private sale for us would include:

    a. no need to put half our stuff in storage for 2-3 months to make the place look less cluttered
    b. no need to paint the place up
    c. not having to keep the place spotless for 6 weeks while strangers wander through our place and sticky-beak through our cupboards
    d. saving on real-estate agent costs.

    having said that, articles on-line indicate that you can get up to 20% more by selling at auction.

    what do you guys think? esp any thoughts on price of real-estate agent+storage+painting (two bedroom flat - in white) vs potential additional price gained at auction....
  2. I'd like to see the proof of that for two bedroom flats in suburbia.

    If it's a run of the mill, standard flat, auction is a waste of money. Your target buyer may be intimadated by the auction process.

    Are there many two bedroom units for sale in your area? Does your's have a view, large balcony/garden area?

    Auctions are for unique places where you want at least two people keen who will bid and bid.

    The agent wins regardless if the place sells or not, with you forking out just for the privelige of them organising it all for you.

    You can find recent sales here http://www.realestate.com.au/cgi-bin/rsearch?a=bhp&t=sol find a similar property, call the agent and ask them what the place sold for. Then discuss with your private buyer and split the commission so you both win in the end.

    All the best with it all.
  3. Only you can decide if the potential 20% extra (less the various expenses) is worth it. :-k

    From my perspective - do some research around the local area and determine if the private sale price is reasonable. If it is and you and the purchaser are happy with that, then the "less hassle" approach would seem to be a good way to go.

  4. With the way inner suburban rentals are going, have you considered renting it out and using it as collateral on the house purchase. I would look seriously into this as you could get a very tidy return as a rental property at the moment I reckon.
  5. I would say it depends on the market.

    In a flat market where you can accurately predict the sale price go private sale.
    In a dynamic market where prices are jumping up rapidly then an auction may give you a pleasent supprise.

    So you need to look at the market for the sort of property you have in your area for the last three months or so and then make your call.
  6. Carri, go here http://www.rpdata.net.au/ and compare the prices for which similar properties in your area sold or are priced.....
  7. I'm curious as to why you think a private sale would avoid all these things? Firstly, impressions count when selling your house - by whatever method. You are going to have to put up with strangers wandering through your house whether you auction or not. How else are they going to see the place and decide whether they like it? You also need to make the place look nice - if it needs painting, then do it - you'll end up with a better sale price. If it is cluttered, then fix that too. Keep it tidy and neat. You'll only end up doing yourself a disservice (and ultimately make less $$$ in the sale) if you think by selling privately you don't need to have it well presented and make it available for people to wander through!
  8. Auctions really depend on where you live.
    Here in Glen Iris where houses are at a premium and demand outsells supply every house up for sale goes up for auction and recently some of the sale prices are insane!

    When I lived in Patterson Lakes we sold our unit privately as thats the way it was done down there. Even the large lakeside houses were sold privately.
    There were very very few auctions.

    Fixing up your unit and maybe adding some newer mod cons will really raise the price of the place because it becomes attractive for rental and for buying from prospective landlords becuase of depreciation of new items being good for tax times.
    I could go on and on but the best thing for you to look at is the area you live in and the types of sales that go on there.
    Real estate agents get a better commission when it comes to auctions as the auction fee is separate to the sale fee.
    yes you can get more if it SELLS at auction but depending on your area if you make 2k extra on auction that will be eaten up in auction fees.
  9. Carri
    I noticed you live in Hawthorn East.
    Auction that baby don't sell privately you will make a shitload more.
    Hawthorn is one of those markets that will sell.Make sure you use a local and reputable real estate agent with a great track record in auction sales.
  10. go auction if you want to sell it asap (all though will be harder to get a nice sunny auction day now it is coming to winter, less people looking?) if you don't need to sell it asap maybe try and sell privately and if it doesn't sell over winter you could always go to auction come september. Work out what price you want for it, who knows this girl interested might even pay that price???
  11. Don't believe in that assumption.
    What we noticed over winter were that there were less properties on the market, and more to the point less quality properties.
    so any that were good had a LOT of interest, because they looked so good in comparison.
  12. I've never understood, as a buyer, why you would buy a house at auction. How can you win? the seller just puts a reserve on that is the maximum they think they could get if they sold it on the open market, so they can't loose.

    the worst case for the seller is they get a bid that is lower then the reserve then they negotiate to what they would have got anyway. The best case is they get a few people get over-excited on the day and they get more.

    So it's a win-win for the seller and even-loose for the buyer. I'll ask again, why would you buy a house at auction?

    Having said that, in the current climate you may waste a lot of time going to auction, because you may not even get a bid. Then have to pay the auction fees for nothing.
  13. thanks all for your input. really appreciate it. can't quote and reply to everybody but wanted to specifically note a couple. cheers and any further thoughts will all be taken on board. really love the spread of input and experience NR offers. cheers, c x

    not a lot of 2-br units around here toecutter, and yep got decent patio, small courtyard a good undercover storage/alternative outdoor area out back.

    thx triway. gave this some consideration and decided against for personal reasons.

    she's a lady who lives in our block. she, her partner, her daughter and mother have already been through and love it as is.

    i'm beginning to get that feeling. and yep, we went to an auction in glen iris on saturday and it went for $100k more than quoted price for a medium-size 3 br unit.

    good call jadey, but not in any particular hurry (unless k'n'i are successful in our current baby-making endeavours sooner than later :wink: )
  14. If your buying, auction is best and less people turn up at auctions when its raining, if your selling private sale is best. If your buying at an auction you can see what the next bid is you have to beat even if its planted. Where as a private sale your dealing with skilled agents bluffing you up. This will get you more money nearly all the time if your selling privately.

    Keep in mind Real Estate agents are only loyal and responsible to the seller of the property...never buyers. Its in their code of ethics. (so called ethics)
  15. That'd be a great theory if sellers weren't allowed to set a reserve, but they can and it's usually higher then they would list it for sell. So, as a buyer, you can't win at auction.
  16. Market forces dictate.
    If the demand is there but the supply isn't as in Hawthorn or Geln Iris or some of the other leafy suburbs then auctions will prevail.
    A shitheap near our place sold for 850,000 last weekend.
    Another one 2 blocks away 910,000 typical 3 bedroom brick veneer.
    The old adage worst house in best street applies in these situations.
    Carri will do well to Auction and get as much as she can because people are prepared to buy in her area.
    Even if it is passed in the reserve she has set will be met in good time.
  17. I disagree, its reality not just theory. 10 years ago I bought a property for $575k at auction where we had it valued before auction at $650k. Capital growth was at a huge progression in this area at the time and the owner bought it 20 months earlier for $420k, did no work to it and sold it on later inwhich I bought it. He had a reserve for $550k
  18. Well there may be a few example of people trying to unload quickly, but all the auctions I've been to have been passed in and referred at well over the market value. Even banks don't sell the repo. properties that cheap anymore.

    I just realised the title of the thread was "Private Sale . . " rather than "sale vs auction" Yep grab it with both hands if you can. Real estate fee are a real reeming.