How to Sell Real Estate using the “Tender” method.
The benefits of selling your property by tender are numerous.
Depending on your situation, this method could bring you a higher sale price in a quicker time than the traditional Private Treaty method.
Benefits to the Tender Method:
- Properties offered for sale by tender do not normally include a sale price in the listing. This means buyers are unable to compare your home with others in the area and will submit an offer based only on their own perceived value of the property.
- As all offers are kept a secret, buyers are unaware of the price other buyers are offering to pay for the property. This often leads to one or more offers that are substantially higher than other offers.
- Buyers may be encouraged to submit a higher offer when they notice many other interested parties inspecting the property.
- Bidding at an auction always stops when the competition stops. Therefore, offers are often higher when selling by tender, as this cannot happen. Prospective buyers must anticipate the value of the property and the offers made by other interested parties, which usually means they immediately offer the maximum they are willing to pay.
- Selling by tender always involves setting a due date for tenders – usually in the near future. Marketing campaigns must be maximised for effectiveness during this short period, which often saves time and money by keeping the selling process short.
- Some properties are quite unique and it can be hard to determine accurate market value. For such properties, the tender process can indicate the true market value of a unique property for the seller. The seller can then adjust their expectations accordingly.
- The seller is not obligated to accept the highest offer and can, instead, use this knowledge for future negotiations. Sellers can extend the offer deadline whenever they like, which can help when there are fewer offers than expected. Sellers also have more control over marketing campaign costs by setting a deadline that limits advertising time and expenditure.
- Sellers are not pressured to make an immediate decision like they are during an auction. Instead, they can view the offers in a relaxed setting and take time to discuss all options with their selected agent. This reduces the possibility of a regretful sale and gives the seller time to consider what price and terms best suit their particular situation.
- Sales by tender can be set as unconditional sales the same as the Auction method. This means prospective buyers already can have met finance requirements when they place an offer. Sellers can view each offer as a potential sale and will not need to spend time on prospective buyers who are unable to gain finance approval.
- At an auction, the competition is visible, so the price only rises to the desired amount when two bidders compete against each other. Contrary to this, the tender process only requires one interested party to ensure a potentially suitable offer because the competition is invisible. Interested parties are only aware of their own offer and must, therefore, submit their highest price to try and secure the sale.
- Sale by tender creates a more comfortable offer process for prospective buyers who cannot or will not attend auctions. This often means sellers will receive offers from interested parties who would not feel comfortable bidding at an auction, thus reaching more potential buyers.
Here’s the process for selling by Tender:
Step 1: The seller lists the property for sale through Qld Mobile Realty.
The listing includes the due date for tender applications and any other relevant tender information.
Step 2: The seller markets the property to prospective buyers at Open Home Inspections.
Interested parties can attend an Open Home inspection before submitting a tender. This provides an opportunity for the seller to engage potential buyers and market the property. It is also an opportunity to discuss any particulars, including terms and conditions before the buyer submits an official Tender.
Step 3: Prospective buyers complete a Tender form by the due date.
Offers are submitted to the Seller using an official Tender form, which usually includes price, deposit and any special terms and conditions. The Tender documents are sealed in an envelope for secrecy.
Step 4: The Seller opens all tender submissions after the due date.
The seller must wait until the due date has passed before viewing all offers together and deciding on the best one. The best offer does not always equal the best price – offers are considered based on price and any conditional terms included in the tender document. One example of a typical term and condition would be the purchase of the property is “subject to a 7 day Pest & Building Report”…
Step 5: If an offer is suitable, the seller accepts and the house is sold, subject to the Tender offer conditions.
A tender submission is binding once the seller accepts. Tenders in Queensland are subject to a standard 5 business day cooling off period.
Step 6: If no suitable offers are present, the seller can negotiate or reject all offers, the potential Buyers & the market will not have known the Sellers price expectation.
A seller and prospective buyer may come to an agreed price that is above the initial offer, in which case the seller will decide to sell. If this doesn’t happen, the seller is free to begin the process again or choose an alternative sale method.