Coronavirus: How to win the private sale game
Cloudy private sale practices have been thrust into the spotlight after the auction market was axed amid the shutdown. Experts offer their advice on negotiating the less transparent method.
Cloudy private sale practices have been thrust into the spotlight after Melbourne’s auction market was axed amid the shutdown.
Negotiation tactics like the “best and highest offer” have been slammed as unfair to buyers trying to navigate the property market without auctions.
Buyer’s advocate Cate Bakos said the process was often “highly stressful and upsetting” for those who weren’t experts at the property game.
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“Auction rules are very clear and agents don’t have room for creativity,” Ms Bakos said.
“But in private sales, agents can determine how they want to facilitate the transaction … systems like the best and highest offer process can lead to feelings of distrust or make buyers feel they are being bluffed by agents.”
The controversial tactic means buyers can only submit one offer by a closing date, often without any later opportunity to revise it.
Ms Bakos said buyers should ask agents about the vendor’s preferred terms of sale, including price expectations and their ideal settlement period, to try and secure a property. It was also important to conduct sales research about the local area to determine the right price point.
Full Circle buyer’s advocate Rob German said agents should make negotiations “more transparent, like an auction”, so that buyers weren’t bluffed into paying more than the property’s “true commercial value”.
“It would be easy to create a platform where everyone can see bids, despite it being on a private sale basis,” Mr German said.
He suggested buyers make reasonable early offers within the price guide because many vendors would be keen to sell quickly amid the pandemic.
Real Estate Institute of Victoria senior vice president and agent Adam Docking said auctions were the most transparent type of sale, but offers by a fixed date could still be a fair way to get deals done.
“There are still some situations where the highest offer and second highest offer are light years apart, but sometimes they can be as close as $500,” Mr Docking said.
“But vendors will often ask for second and third rounds of offers.”
He said more agents would turn to online auction platforms to try and keep sales as open as possible.
More than 2700 auctions were cancelled across Melbourne after the federal government announced the shutdown of public auctions, open for inspections and auction houses.
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Originally published as Coronavirus: How to win the private sale game