Sell your home for Top Dollar in any market - Stage 1
Method - Auction or Private Treaty
Auctions are fundamentally flawed and produce sub-par results in most markets. For the majority of families, a well executed Private Sale will produce a higher Selling Price.
METHOD - POINT#1
Auctions - not recommended
Auctions are not designed to help the seller get the Maximum Price. The current Auction process was invented by real estate agents to guarantee a 30 day sale and therefore give them guaranteed cash flow for their own business.
Auctions are fundamentally designed to get the second top dollar plus 1 bid. Imagine you have two buyers at Auction. Buyer1 has $500,000 to spend. Buyer2 has $600,000 to spend. At Auction, Buyer2 only has to beat Buyer1 ($500,000) to win the Auction. So the home sells at $501,000 because Buyer2 was never asked to submit his best offer, which would have been $99,000 more, at $600,000. Auctions are not designed to get the absolute highest price from the highest bidder. In normal markets, Auctions get you the second-highest price plus 1 bid.
Auctions also have a built-in deterrent. In Queensland, it is illegal to advertise with a price guide when going to Auction. So the buyers have no idea what price the property might sell at. This seriously annoys the buyers, who don’t want to waste time looking at properties out of their price range, and statistics show that buyers are less likely to click on your advertised property if it lacks a price guide. So in Queensland, going to Auction means less buyers will engage with your home.
There are times when Auctions can be fantastic. Those times are bull markets with huge demand and an equal lack of supply. When demand significantly outstrips supply, the definition of ‘home value’ is thrown out the window, and buyers will create their own value as they fight to get into the market. In these situations, Auctions can be an outstanding way to sell a home. Outside or Sydney and Melbourne, bull markets with the required high demand and low supply are infrequent – meaning Auctions are suboptimal for most property transactions in most market conditions.
Take Away : Auctions are disliked by buyers and have flaws in the methodology. In most cases, they are a bad idea for a seller.
METHOD - POINT #2
Private Treaty - where Top Dollar resides
Private Treaty is the most common way that properties are sold across Queensland and is the normal “For Sale” process.
Managed by a skilled agent, the Private Treaty process is perfect for obtaining the absolute highest price in that market, and will outperform auctions by many thousands of dollars.
Let’s go back to our example above, with Buyer1 having $500,000 to spend and Buyer2 having $600,000. If confidentiality is kept between the buyers (ie “Private Treaty), both buyers are required to submit their Best and Final Offers, and are not aware of what price they have to beat. In this case, Buyer1 bids $500,000 (his max amount) and Buyer2 bids $600,000 (his max amount). In the Private Treaty, Buyer2 will bid $99,000 more than would be required to win an Auction.
This process only works when the agent professionally manages the process with the intention to extract an outlier price. Unfortunately, many agents undermine this process and accidentally ruin the negotiation by talking the price down, as you will see in the later stages explained on this website.
Take Away : Private Treaty, when done correctly, can extract outlier prices and is the preferred method of sale for most properties.