Auction VS Private Sales | Pros & Cons

There are plenty of selling options open to us here in Australia – but on occasion that can open up a ‘minefield’ situation and muddy the waters, making it harder to feel confident and make a firm decision. Here we share the pros and cons of auctions and private sales, helping you to decide what’s best for your clients.

First things first – a sale is an individual process

There are methods and mantras you can apply to each and every sale to maximise your chances of success – but on the whole it’s important to remember that each and every sale is unique. Some are very similar – but all of them have varying factors that mean they must be approached on an individual basis. This can complicate matters when it comes to deciding on a private sale or auction route, since there are a variety of factors at play, including the client’s own personal preferences. With this in mind it’s key to stress that the purpose of this article is to share information regarding each method – there’s no right or wrong, as the decision ultimately is between you and the client and will depend on the property itself.

Potential pros of auction sales

Auctions are particularly well-suited to properties that are quirky, unique or in high demand. The bidding situation can quickly push up the price over the market value, since interest in the room keeps momentum going. A protective reserve price is set, so the seller needn’t lose out – and the auction is held at a set date and time following an intensive marketing campaign, providing plenty of opportunity to drum up interest. Auctions are particularly popular in Melbourne, where public auctions can fetch serious sums for the most sought-after properties.

Potential cons of auction sales

There aren’t many downsides to auctions – but naturally there are situations in which they simply won’t work. Some properties simply don’t lend themselves well to being auctioned, so this is something to guard against. Timing is another potentially troublesome factor. The last thing any agent or seller wants is to orchestrate a marketing campaign leading up to an auction only to find the turnout is measly and there are no bids as a result. The other issue with auctions is the public nature of them – they are incredibly open, and this simply doesn’t suit some sellers. In this case it’s possible to organise a private auction, but this could attract fewer people and therefore impact on the likelihood of a sale.

Potential pros of private sales

A private sale with asking price attached is perhaps the most ‘traditional’ selling method – and it does come with a number of benefits both for buyers and sellers. Lots of buyers prefer to know that there is an asking price they can aim for, and find the structured process less confusing and stressful. Sellers also find a private sale less complicated and easier to cope with. Private sales are most suited to areas with low demand and plenty of market data giving agents the best possible chance of accurately predicting the property value. This method is generally less costly compared with an auction – and it’s also best for sellers concerned about privacy – as the name suggests.

Potential cons of private sales

‘Cons’ are difficult to define for private sales – since they generally depend on the situation and therefore often arise when an incorrect choice is made (either by agent or seller). For example, instructing or organising a private sale when a property is situated in a high demand area is likely to result in a lower yield compared with auction – but this might not be a concern for your seller if privacy is more important to them. Ultimately, it’s a case of weighing up the specific pros and cons in line with client objectives, using your experience to guide and advise them on an individual basis.