Auction vs Off-Market – Which Drives the Best Result?

Across Melbourne this year, the pace of real estate has been hard to keep up with. The median home price has broken the previous record set in April 2020, with values increasing by 4.4% over the past 3 months alone – and it’s still climbing!

Naturally, every vendor wants the best price for their property. But the burning question is, what’s the best method of sale to achieve top dollar for residential property in Melbourne’s North in 2021?

While selling off-market might be opportune in some circumstances, it’s possible that vendors could be missing out, especially in the current market. There’s a perception out there with some people, that off-market sales are quicker and bring better prices.

We’re here to challenge that myth. With 75 years of experience, we understand the property market in the North better than most, and we know what works best given the demands of purchasers in the area.

So, what are the common methods of residential property sale in Melbourne?

1. Sale by Private Sale

Private sale remains a popular method of sale across Melbourne’s North.  It involves publicly listing and advertising the property via an agent, at a set price or price range.

The agent co-ordinates an advertising campaign which can include open homes and private inspections, as well as extensive advertising (printed and online), and professional photography.

Prospective buyers make an offer on the property and the vendor can accept, negotiate, or decline the offer.

Sale by private sale allows the vendor to retain the most amount of control in the selling process. It’s a relatively stress-free method and there’s no pressure for the seller to accept an offer that doesn’t meet their expectations.

2. Sale by Auction

While Auctions are a more popular method of sale for inner Melbourne, there’s good reason for it, as they generally bring great results. In the hands of a savvy agent and auctioneer, auctions can drive up a sale price within a short timeframe.

Sale by auction has some distinct advantages for vendors:

• The vendor sets the reserve price, which means that there’s no pressure to accept an offer that’s too low
• There is no ceiling price – bidders often raise the price well above vendor expectations
• Properties sold at auctions are generally unconditional

3. Off Market Sale

Selling a property ‘off-market’ simply means that the vendor and the prospective buyer deal direct, and the property is not listed publicly.

While private or off-market sale might be a quicker option, it’s certainly not guaranteed to bring the best price: how can the vendor know what price he/she might be able to get if the property is never actually taken to the open market?

In the current climate when property sales at auctions are peaking well above vendor expectations, off-market sales may not bring the best return on investment. In fact, it’s highly likely that in a time when the market is so buoyant, vendors may do themselves a major disservice by opting for this method of sale.

Ultimately the state of the market also plays a big role in the choice of method of sale. In quieter times, such as the second half of 2020 due to covid restrictions, an Auction may not have been the correct choice. But the current market is quite different – there’s an undeniable sense of excitement and competition that comes with auctions: consumers are outbidding each other and driving housing prices to new heights.

So, what’s driving the current housing market?

As we know, inbound foreign migration has been a steady driver for Melbourne’s housing market for many years.  But with this all but stopped, what’s the motivation behind the market in 2021?

Government stimulus packages are at record highs and interest rates are low. Lifestyle properties which were previously out of reach for many people have now become achievable.

While all capital cities across the country have seen an increase in properties selling above expectation, Melbourne continues to out-perform other cities. Demand is far outpacing supply, and Corelogic estimates that the number of settled dwelling sales for the past 3 months is tracking at 38% higher than this time last year.

So when it comes time to sell, reach out to your local Love & Co team so we can determine the best method of sale for your property – we’re here to guide you to maximise your return on your property.

The information in this article is for information purposes only and should not be taken as financial, legal or personal advice.

While care has been taken to ensure that information contained in this article is true and correct at the time of publishing, any changes after the time of publication may impact on the accuracy of this information.

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