When you are looking to sell your home, you have a few options to choose from as to how you would like to go about selling your property. You can sell your home through a private sale, through an auction, or through expressions of interest – also known as selling by tender.
What Does It Mean to Sell Your Home by Tender?
When selling a home by tender, the seller works with a real estate agent to draw up interest, and invite secret offers from various interested parties. One of the nice things about selling a property this way is that it allows buyers to approach with whatever price they feel comfortable with, leaving the decision to the seller, as opposed to the seller setting a pre-determined price.
How does a Sale by Tender Work?
Think about a sale by tender being something like a secret silent auction. This means that offers are made in secret, and presented to the seller and their representation in individual envelopes. There is a date set for offers to be submitted on. Leading up to this date, interested home buyers are able to view the home. Once perspective buyers have visited the home, and have decided that they would like to put in an offer, they are able to decide what, (if any) conditions they want to have included on such offer, common conditions include: approval of financing, and a successful home inspection.
After the pre-set date has arrived, and the offers have been submitted the vendor and their real estate agent go through the offers that have been made, and decide on the one that works best for them. While obviously the price is without a doubt one of, if not the deciding cost, additional details such as the closing date, and the conditions that have to be met in order for the sale to go through are often major deciding factors as well.
If the situation arises where the vendor does not find any offer to fit their liking, they have the option to sign back an offer with an adjusted amount or conditions. This is a negation process that is a bit of a gamble, depending on if the original offer was the perspective buyer’s first and final price.
Benefits of Selling by Tender
-The seller has the control over how much money is invested in marketing the property. This is done by their having say over how long the advertising should last.
-With offers being kept secret, the bids submitted are based on the potential buyer’s belief in what the house is worth, as opposed to trying to simply beat the previous bid. In many cases this leads to higher sale prices.
-The seller is able to have control over the process, and choose the offer that suits their situation the best.
-Due to the fact that there is no actually listed price for the property it is not possible to compare your property to others on the market in that price range.
Risks of Selling by Tender
-Because the time that a property is advertised during a sale by tender is generally shorter than other forms, often there are less perspective buyers for the property.
-Often times, offers made by perspective buyers are thought to be final. This means that when a seller goes back to see if there is room for negotiation, the process can be long-drawn-out, and many times unsuccessful.
-Due to the fact that there is no real listed price for the property, many times interested buyers will bid lower than actual market value to see if they are able to get a deal.
The idea of selling a home by tender is not a new one. In fact, the concept has been around for years. In recent years sale by tender has become more, and more popular because of the freedom and control that it provides both the seller and the perspective buyers. Although often quite successful, sale by tender can be quite risky. This is why it is highly suggested that if considering selling your home in this way, you consult and work with a real estate professional that is experienced in this sort of sale.