AUCTION or TENDER – what is the difference?

Actually when it comes to making a decision to sell your property the theory is pretty much the same, it is the method that is different.

In other words, taking a property to tender is in some respects the same as taking a property to auction in that ‘the price’ is taken out of the equation and the ‘market’ deciding on price is common to both as is the close-off date. The difference is that ‘tender’ is by confidential written application and ‘auction’ is conducted out in the public domain by a show of hands from registered buyers deciding the result or otherwise.

Geoffrey Ryan of Henzells Mooloolaba who has successfully used both methods says the main difference is that at an auction everyone knows what their next move is likely to be and the prospective buyer knows what he has to do to win.

“With a tender it is a confidentially submitted offer. No one knows what you have to pay to be the winner and your opposition doesn’t know what price you are bidding” he says.

A typical example of how well the process works was Unit 402, a grand three-bedroom residence in ‘Platinum” on Duporth Avenue, Maroochydore that recently sold prior to the tender closing off date.

“It needed to be marketed by the tender process because of the unique product and the flexibility of the sales options. It presented like a multi-million dollar property and throughout the process it looked like a multi-million dollar property, hence it attracted offers in excess of $2m,” Geoffrey said.

Being a professional couple the vendors went through the usual process of interviewing potential agents and then contracted the person they believed to be the most experienced professional to do the job for them; they listened to recommendations and followed that advice.

Geoffrey says “We went through a fabulous marketing campaign with bold full-page out-front advertisements, produced quality brochures, multiple press advertising, wonderful Web exposure, and great signage. As a result the property attracted a high volume of ‘quality’ interest and we achieved a great price for the vendor.”

Geoffrey said that right from the start the whole process was like a ‘honeymoon’. “Everything just flowed, “all the ducks lined up perfectly”, including the weather, and we sold the property.

Geoffrey added that part of the conditions of sale were the same as for auction – cash unconditional, waiving the five-day cooling-off period, and the usual deposit details.

“Some of the attractions to a tender as compared to an auction are that the purchaser can put conditions on the sale which may be a flexible settlement period, or the boat stays with the waterfront house, or the furniture is part of the deal. The tender process has many variables as compared to an auction.
“At the end of the day the success of a tender comes down to the agent knowing how to work the process. It is not just a matter of calling it a tender; it takes expertise to run a tender to get the best result.

“In the case of Unit 402 ‘Platinum’, tender was my recommendation to the vendor as the apartment could be offered fully furnished, partly furnished or unfurnished. A lot of the furniture was manufactured especially to suit the apartment. As a result, once the apartment was purchased the buyers then proceeded to purchase half of the furniture.

“There is a time and place for the tender process. Some properties with a special difference warrant being sold by tender as compared to auction, and those experienced in conducting tenders have good reason for recommending it,” he said.

As they say in the auction process “it doesn’t matter where we start, it’s where we finish that counts”, and consequently with Apartment 402 ‘Platinum’ the purchaser knew that he had to ‘put his best foot forward’ to take the property off the market in order to beat other prospective buyers. The purchaser was advised exactly what to do to be successful.

“At the end of the day I have an extremely happy vendor and a very excited purchaser who can’t wait to move in.”

Geoffrey confirmed that the vendors accepted an unconditional cash offer in excess of $2.3m. The Brisbane-based buyers who spend a lot of time on the Coast knew exactly what they were buying. After falling in love with 402 Platinum they changed their minds about building their dream home on their beach front land at Coolum (which is now on the market with Geoffrey Ryan). Other buyer interest came mainly from local interests and Brisbane and there was good interest from a Sydney party who were not ready to make a move to the Coast. “They would have bought it had the timing been right,” he said.