How to discern which method of sale is best for your property

In Australia, there are four popular methods of sale for farmland: public auction, private treaty, expressions of interest and tender. The benefits of each, and considerations, are outlined briefly below.

1. Public Auction

The auction method is recommended for properties:

• Which are in a high demand market
• Which are likely to encourage competitive bidding between multiple buyers, the price is not capped
• Where it is preferable to let the market determine the price rather than predetermining it prior to sale
• Where creating deadlines for purchasers will limit procrastination
• Where an unconditional sale is desired. Buyers must have their finances organised.
• Where sticking to a marketing budget and a specific time frame is important

Recent example: ‘Tenterden Station’, sold under the hammer at auction for $17 million. 6 registered bidders, 26 bids placed with the bidding opening at $9 million, .

2. Private treaty

The private treaty method is recommended for properties:

• Where the asking price is very clear and can be set as a guide
• Which are not unique and are quite easily comparable to other properties
• Where time is not essential in the sale equation

Recent example: ‘Dyamberin’, sold for $13.4 million in an off market private treaty negotiation. The negotiation took a little over 6 months to achieve an unconditional sale.

3. Expressions of interest

This is a useful sales method for a property which is:

• Special and unique and not directly comparable to many other recent local sales
• Likely to attract specific buyers
• Where it is preferable to let the market determine the price rather than predetermining it prior to sale
• Requires a defined close date to qualify the interest and bring it to a head.

4. Tender

Tender presents another opportunity for sellers to create a competitive situation without stating a listed price. They set the terms, conditions and the deadline, and prospective buyers have only one opportunity to put forward their most competitive offer. Like auction, tender increases the number of enquiries, inspections and opportunities to obtain the very best price for the property. Also, the seller doesn’t necessarily have to accept the highest price. They can choose to negotiate with any of the tendering parties to achieve a satisfactory conclusion. The main benefits of this methodology are:

• All offers and negotiations are confidential.
• The seller sets the terms, conditions and deadline.
• The target marketing draws attention to the property, adding a competitive edge that strongly favours the seller.
• You do not overprice or undersell the property; instead you let the market determine the value.
• The `no price’ aspect will attract more genuinely interested buyers.
• In the case of an open tender the seller may decide to accept a cash offer prior to the tender date.
• A high level of service and feedback by their agent.

Benefits to the buyers

A set tender date allows the buyer to better plan and arrange finance, sell their existing property, organise a property check, familiarise themselves with all the tender documents and consult their solicitor.

Want to discuss these methods of sale? andrew.starr@raywhite.com or bbirch@raywhite.com