Auction, Fixed Price, PBN (Price by Negotiation), Tender, how do you decide what to do? Choosing how to sell your property can feel like a big decision but we are here to make it less stressful. We will sit down and explain what each of the different processes entail, what their pros and cons are, what our recommendations would be and why and answer any questions you might have. We want to make sure you are fully informed and feel comfortable with the decision you make.
Below we have provided a brief overview of the main sales methods for real estate, Auction, Tender, Priced and PBN (Price By Negotiation).
Auction
An intensive, high-profile auction campaign attracts genuinely interested, cashed-up buyers. Combined with the excitement of the auction itself, there’s a natural level of competition that helps establish the highest possible price on the day.Selling by auction is widely regarded as the most straightforward and seamless method. Because your property is generally on the market for a shorter period of time, this creates a sense of urgency for the sale.An auction sale is unconditional, which means that once your property exceeds the reserve (set by you) and the auctioneer declares it sold, you can sign the paperwork then and there and look forward to settlement.
- Set date compels buyers to make a decision
- Offers on the day are cash/unconditional
- Owner sets the terms of sale (settlement date etc)
- No price that buyers can object to and try to beat down
- Buyer competition forces price upwards
- Attracts buyers over a wider price range
- Buyers decide on suitability of property rather than price
- Company focused on achieving best price
- Property compared to others on its features rather than asking price
- Short intensive marketing with high impact
- Has further marketing opportunities if not sold on day
- Structured plan in place rather than waiting for buyer
Fixed Price
Under fixed price a property is listed with a specific price. If the property is priced correctly, it will attract keen interest and, in some cases, multiple offers resulting in a premium sale price. The fixed price also provides the buyer a price guideline and allows for a property search by price on real estate websites.
However, it is easy to overprice or underprice a property.
With an overpriced property, buyers may discount the property without first inspecting it. They could judge the property solely on the price instead of the photos or the look of the home, which in turn limits the market.
With an underpriced property, typically the sale will occur quickly and be purchased by one of the first people to see it.
- Pricing listed
- More widespread marketing
- Salesperson takes full responsibility
- Buyers set out to pay less than asking price
- No control over conditions contained in sales contract
- Pricing limits the amount home seller will achieve
- If priced too high buyers will offer on other properties
- Property can become “stale” and price reductions may be necessary
PBN (Price by Negotiation)
The benefit of price by negotiation (PBN) is that it generates a level of market interest that ultimately helps the seller gauge what a fair sale price is. The ’no price’ aspect will also attract more genuinely interested, cash-in-hand buyers.
By contrast, unlike auction and tender, there is no sale date or deadline in place, so there is no urgency placed on buyers to make a ‘buying’ decision. This method can sometimes cause frustration with buyers as they will typically want to know the price.
- No price is listed
- There is no end date for offers.
- A seller may choose to sell by negotiation when it is difficult to estimate the market price.
- Buyers can attach conditions to their offer, such as a building inspection, approved finance or condition of selling their own home.
- Sellers can attach terms and conditions to the sale, for example, the settlement date and which chattels will be included.
- If there is more than one offer, this sale makes become a multi-offer process.
Tender
The tender method (also known as Deadline) of marketing establishes a competitive environment without having to list a price. You also set the terms, conditions and deadline.
Prospective buyers become emotionally involved before they consider price and have only one opportunity to put forward their most competitive bid. You have the chance to accept, decline or continue negotiations. It’s your choice. You’re in control.
Increased enquiries and inspections are often generated by this sales strategy. All tender details remain undisclosed and confidential.
- Sets a specific time frame—buyers must decide
- deal if property needs “investigation” by buyers
- Prices offered remain private
- Owners can choose which buyer to work with
- Offers may contain buyer “conditions”
- May encourage lower offers
- No buyer competition as in auctions