Date: 21st Jul 2020

An overview of the range of methods used

There are many pricing methods used to sell property. This comprehensive guide details each of the options a vendor can use. Speak with your Tremains agent for more information about how to go about putting an offer on a property based on which sales method is being used.

Auction

Selling a property at auction is an open process where buyers bid against each other to purchase the property. The vendor sets a reserve price before the auction and once this price is reached, the highest bidder becomes the successful buyer.

• All bidders are cash buyers – there are no conditions on the offers and sold means sold
• A vendor can still consider offers before the auction if the auction terms and conditions allow for it
• A vendor will set a reserve price which is the lowest price they are willing to accept
• Your real estate agent will know how many interested parties will be in the room as buyers must register
• There is no ceiling on the price – no restrictions by advertising a price

How the bidding process works:

Once the bidding passes the reserve price, the property is on the market and will be sold to the highest bidder.

If the bidding does not reach the reserve price, the auctioneer will pause the auction and discuss what the vendor would like to do next.

• If bidding is close to reserve price, but not quite there, a vendor can agree to put the property on the market, in which case the highest price buys the property; or
• The vendor can advise the auctioneer that they will not sell at that price and the property gets “passed in.” The auctioneer will let people know the auction is finished because the reserve price has not been reached.
• At Tremains, we suggest that the vendor negotiate with the person who made the highest bid. This still gives them the opportunity to sell the property on the night – however any offers may not be unconditional.

Tender

A tender is a method where buyers submit confidential written offers for a property by a set date. Offers can be accepted prior to the advertised close date, but this must be made clear in the advertising. There is no reserve price but there may be a price guide.

• All offers are confidential
• Vendors have the option of accepting an offer before the tender date as long as this is clear in the marketing material
• Vendors have time to consider the offers before they make a decision
• There is no ceiling on the price – no restrictions by advertising a price

An offer will be drawn up on tender documents provided by the vendor or their solicitor. If an offer is made prior to the tender close date, it is drawn up on a standard Sale and Purchase Agreement.

Price by negotiation

Selling a property by negotiation is a good way to sell when it is difficult to estimate the price a property is likely to sell for.

This sales method sees a buyer make an offer based on what they believe your property is worth. Buyers have to do their own research to make this judgement and then vendors can negotiate with them on price through the agent.

• Vendors can set the price by comparing “like” properties
• There is no time pressure on buyers
• The price by negotiation method can be used with no price indication

Negotiating range

A property can be marketed by giving a pricing guide or indication of the price range a vendor expects to achieve for their property.

• The home can be be marketed to a wide range of buyers
• The vendor can negotiate price within a wider range

Fixed price

Properties can be advertised with a price. This method of sale still allows the buyer to negotiate with you on price.

• Makes buyers most comfortable knowing vendor’s expectations
• Recent market statistics help to set the price

Deadline Sale

A deadline sale is similar to a tender in that buyers submit confidential written offers for your property by a set date. Offers can be accepted prior to the advertised close date, but this must be made clear in the advertising.

There is no reserve price but there may be a price guide. The difference between a deadline sale and a tender is that rather than submit an offer on tender documents, the buyer submits their offer on a standard Sale and Purchase Agreement.

• All offers are confidential
• The vendor has the option of accepting an offer before the deadline date as long as this is clear in the marketing material
• The vendor has time to consider the offers before you make a decision
• There is no ceiling on the price – no restrictions by advertising a price