Pros Cons Of Ipo Versus Private Sale

Pros cons of ipo versus private sale

What is a private sale?

When selling, there are two basic paths you can choose to sell your home – send it to auction or offer the property for private sale, also known as private treaty.

But how do you know which method is right for you and your property?

There’s a few things to think about.

Firstly, will an auction work in your area?

Both Melbourne and Sydney are the auction capitals of Australia, but if your home is located in an area where a private sale will generate a better result, why go to the expense (and extra stress) of conducting an auction?

If you’re thinking of selling, get the latest industry-leading property data and insights for your property.

What is a private sale?

A private sale is when a property is advertised and its potential buyers are invited to make offers to either the seller’s agent or the seller directly.

In this instance, the sale doesn’t go to auction.

Melbourne and Sydney are the auction capitals of Australia but a private sale might generate a better result. Picture: Getty

What you should do before making a private sale

When making a private sale, potentially interested buyers may lowball you because they’re aware you may not be experienced enough to know what your property may be worth.

To overcome this, make sure you do the following:

1.

Pros cons of ipo versus private sale

Decide on the best sales method for the area your property is located in

If most of the homes in your area are offered for private sale, there may be a good reason for this. Auctions may simply not achieve the desired result in your area.

2. Do your homework

Speak to a number of local real estate agents and find out which method they would recommend and why.

Certain areas – and even certain properties – within an area will achieve a better result when sold via a private sale versus via an auction.

 

Weighing up your options: Private sale, auction, EOI or fixed date sale?

What Is A Private Placement?

Your selling options explained

What are the pros of selling via a private sale?

Deciding to sell a property yourself is an important financial decision. Not only can it help you save thousands of dollars in agents’ commissions, it can help you stay in control of the final outcome of the sale.

Here are some key factors that’ll work to your advantage when making a private sale:

1.

Speed

An auction campaign can take up to four weeks to run its course, offering a home for private sale can achieve a far quicker result. Anyone interested in your home can make an immediate offer and enter into the negotiation process with you.

2. Flexibility

A private sale may suit owners not in any particular rush to sell.

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Sellers can take their time in receiving offers and selecting the best potential buyer. Sellers can choose to extend the settlement period as well if the need arises thereby providing more flexibility to them.

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Unlike an auction, there’s no specific set date involved for selling the home.

3. Privacy

A private sale can be just that – private.

They public nature of an auction (especially with curious passers by) can be off putting for some vendors, and others might just prefer to keep their business low key.

4.

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Cost

A private sale may be less expensive than conducting an auction as you will not be paying for an auctioneer on auction day. Depending on the speed at which you achieve a result, a quick sale will mean you will not incur any further marketing expenses.

5.

What you should do before making a private sale

Genuine buyers

Buyers generally prefer purchasing via private sale, as they know their financial limit and will have some certainty about the price of the home. Therefore, you’re more likely to attract buyers ready to buy versus sticky beaks and buyers still in research mode.

Ready to sell?: Find a local agent in your area

What are the cons of selling via a private sale?

There are risks involved in deciding to sell a property yourself.

Pros cons of ipo versus private sale

There are lots of factors that might hold you back when you decide to sell without a real estate agent’s help.

Here are some key factors that’ll work to your disadvantage when making a private sale:

1. Speed

Just as you may quickly secure a buyer, the reverse is also true. Choosing to sell via private sale may mean it takes longer to sell your home.

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If a seller wishes to choose to wait for the right buyer willing to pay their asking price, it may take a while to find a buyer willing to commence the negotiation process.

2. Time

You’ll need to know the market.

Pros cons of ipo versus private sale

The length of time your property will remain on the market can be directly affected if you or your agent fails to price your home at its correct market value.

If you’ve not priced your home correctly to begin with, the listing could become stale and take longer to achieve a result.

3. Price

As above, if you set the initial price incorrectly you can run the risk of selling too cheaply or pitching too high to begin with.

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Having to reduce the asking price down the track can make you look desperate.

4. Lack of urgency

Unlike in an auction situation where buyers are forced to make quick decisions, the slower pace of the private sale process many result in the process being drawn out as buyers consider other choices or wait for something better to come along.

When making the decision, keep in mind that it’s important for any property owner to choose the selling method he or she is most comfortable with.

Pros cons of ipo versus private sale

Seek advice from trusted friends and speak to several local real estate agents. You can then make an informed decision.

Above all else, make sure the sales method you choose is what is going to get you the best result for your home, taking into consideration your property’s location and current market sentiment.