The one decision that could cost you tens of thousands when selling your property

It is one of the most important decisions you have to make when selling a property to get the best possible sale price - auction or treaty?

happy young couple drinking champagne and looking at keys from new apartment

It is one of the most important decisions you have to make when selling a property to get the best possible sale price - auction or treaty?

Whether you choose to sell your property by auction or treaty could be the difference between popping the celebratory Moet or drowning your disappointment in a cask red.

Experts say the way you choose to sell your home is the most important factor in achieving the best price and contract conditions, aside from agent selection and marketing.

New data reveals sellers’ biggest fears when taking their property to the market is failure to sell, and selling too cheaply, which is where experts say a carefully considered selling method helps tip the scales in the right direction.

A Suncorp Home Index survey found about one third of respondents have experienced, or fear they will experience, their property staying on the market and not selling (35 per cent) and their property being valued lower than expected (33 per cent).

Other significant selling barriers identified by would-be sellers include difficulties around moving to a new home (32 per cent), the price of additional fees involved (32 per cent), the inconvenience of showing their home to prospective buyers (28 per cent), an emotional connection to their current home (27 per cent), difficulty finding a good agent (22 per cent) and confusion of where to start (14 per cent).

Only eight per cent of sellers said they weren’t facing any barriers.

Real Estate Institute of Queensland CEO Antonia Mercorella says sellers, particularly first-time homeowners, commonly worry about their property not selling or being sold under reserve, meaning they’ve missed out on potential sale dollars.

For many sellers, upgrading to the next property is also reliant on what their current property sells for, which is a nerve-racking position to be in, she adds.

“For most people, property is the single largest asset they will ever own, so when your main source of personal wealth is being transacted, it’s a nervous time,” she says.

“The scope for things to go wrong can keep some people awake at night.”

But Brisbane homeowners may have less cause for concern than other sellers around Australia.

Price falls nationally have potentially added to the nervousness of sellers, but in Brisbane property prices have generally been reliable, demonstrating steady, sustainable growth year-on-year for many years, says Mercorella.

CoreLogic data to the end of June shows that along with Adelaide and Hobart, Brisbane is one of the only capital cities to have recorded growth over the past month, quarter and 12 months. Dwelling values are up by 0.3 per cent over the past quarter, while Sydney and Melbourne have seen falls of 0.9 per cent and 1.4 per cent.

The number of $1 million-plus sales in Brisbane has also reached a record high, with 9.2 per cent of houses and 3.3 per cent of units selling above this price point over the 12 months to June, according to the latest CoreLogic Property Pulse report.

Mercorella says in this market, it’s highly unlikely a well-presented, well-priced property won’t sell.

“Our jobless rate is falling and our population is growing steadily, with newcomers settling in the southeast corner - from overseas and interstate - at ever-increasing numbers. These statistics should give sellers confidence in the market,” he says.

Vivid Property agent and auctioneer Thomas Coussens says the factors are working in Brisbane’s favour that will strengthen property prices and help sellers profit from selling their home, include the continued growth in infrastructure and the influx of interstate migrants and investors due to the relative affordability compared to Sydney and Melbourne.

“Even during traditionally quiet seasons in real estate and tough financial conditions globally, Brisbane has continued to grow,” he says.

Factors contributing to a successful sale include a realistic price point, presentation, competing properties and how well a property meets buyers’ needs.

Mercorella says agents can provide sellers with a comparative market analysis to demonstrate what buyers have paid for similar homes in the past three to six months, giving a good indication of what buyers will pay for a property.

“Talk to a few real estate agents who operate in your area,” he says.

“They will know what buyers are looking for in each price point and they’ll also have a very clear idea about how many buyers are around at the moment.

“Generally speaking, listings are significantly down across Queensland compared with this time last year, and this means buyers are pressuring the market.

“This could be a very good time to consider going to auction. An auction situation is the ideal way to create momentum, drive demand and entice the maximum possible price from the market.”

The method of sale for a home – either auction or private treaty - is the most important factor in achieving the best price and contract conditions for sellers, aside from agent selection and quality and reach of marketing, says Coussens.

“Selecting the most appropriate sales method to the style of property, vendors’ budget and timeframe, and market conditions at the time, will, without a doubt, remove any risk of underselling,” he says.

“The strength of the market has a big part to play in the selection of the sales method.

“In a soft market it may slow down the process to run an auction campaign, however in a stable or strong market, inserting a deadline, and the real or perceived competition that comes along with a well-attended open home, can lead to some very strong pre-auction offers.”

Auctions are suitable to all properties but not all market conditions, adds Coussens.

“I would be very careful about recommending an auction campaign to a unit or townhouse owner in Brisbane in the current market due to the level of supply and lack of strong competition,” he says.

“City fringe suburbs like Paddington, Milton, Ascot and New Farm are beginning to lean very heavily towards auction as the preferred method due to the higher buyer demand.”

Coussens says a well-rounded auction campaign can definitely push the price of a property up, despite the cost of an auctioneer fee of between $500 and $800, and potentially extra marketing.

“There's no accounting for the difference that competitive and emotional bidding can make to a final sale price,” he says.

“The downside is that not everyone is in a position to bid at auction.

“Private treaty is possibly a more inclusive sales method in that everyone is in a position to buy.

“A well-run private treaty campaign will produce excellent results, but the downside is that by immediately advertising the property with a price, you can be unwittingly putting a ceiling on the final sale price.”

The latest CoreLogic Quarterly Auction Market Review found Brisbane had 1574 auctions over the June quarter this year, behind Melbourne (12,330) and Sydney (9312).

The suburb with the highest number of auctions was Sunnybank Hills (42), while Paddington had the highest clearance rate of 68.2 per cent, followed by Camp Hill, Sunnybank Hills, Calamvale, Eight Mile Plains and Coorparoo.

The CoreLogic report found Brisbane’s overall clearance rate fell from 49 per cent to 42.8 per cent over the quarter, in line with a fall in clearance rates nationally.

CoreLogic auction expert Kevin Brogan says buyers often purchase after a property has passed in at auction, which can affect the clearance rate, and this is likely to happen more going forward due to tightening finance requirements.

“If you’re going to bid at auction you need to have all your finances in order, so when the hammer falls in your favour you can be in a position to complete the purchase,” he says.

Originally published as The one decision that could cost you tens of thousands when selling your property