Difference between auction and classified listings

When listing on Flippa there are two sale options to chose from - classified or auction - and each has distinct differences and situations when one or the other should be used.

Summary:

  • Auctions
    • Short time duration
    • Recommended for low value asset sales
    • Once bids reach over reserve the listing will sell to the highest bidder
  • Classifieds
    • Last up to 6 months
    • Recommended for higher value business sales
    • Sellers can chose to accept or reject offers

Detail:

Whilst it may seem obvious what each listing is, please read this carefully as its vital you choose the right type of listing for your business or asset sale. Choosing the wrong one can easily result in poor performance, poor buyer experience and even sales being cancelled or simply falling apart.

An auction has a limited duration and allows bids from anyone which are automatically accepted. When bids reach or surpass the reserve set by the seller, the auction closes and that bidder is the winning buyer. The listing then moves to payment. 

Auctions do not really support negotiated sale offers. This may sound strange, but an auction is a live environment with buyers able to bid at any time until the end of the auction. There is no guarantee that a buyer that has negotiated a particular sale agreement with you can win the auction - other buyers can still bid against them. If you are looking to negotiate with buyers then an auction is not the right type of listing and you should use a classified type of listing.

Please also note that because auctions are only live for a limited period, they do not allow a lot of time for due diligence or investigation into the asset(s) or business being listed for sale. This can cause potential buyers to not consider your listing - especially if the auction has already started and does not have long to go. 

It is for all of the above reasons that we recommend auctions are only used for simple, asset-based listings rather than business listings. How do you know if your listing is an asset listing Vs a business listing? If you are selling a business operation that has been running for over 6 months, is currently trading and you have your financials together (in the form of a P&L, accountant prepared financials or you use accounting software such as Sage or Xero to keep track of your revenue and expenses) then we would consider what you are trying to sell is a business.

Classifieds can run for up to 6 months and so they enable buyers more time to to discuss the listing and its asset(s) or business in detail with the seller. A classified listing also provides more time for buyers to perform due diligence on what is being listed for sale.

Buyers make offers on a listing that need to be manually accepted by the seller. The seller does not have to accept any offer they do not wish to. When a seller does accept an offer, the classified closes and that buyer 'wins' the listing. The listing then moves to payment.

Classified listings are perfect where a seller wants to negotiate with buyers and field different offers and sales agreements.

A classified format is recommended for high value or more complex listings as sometimes auctions do not provide buyers with enough time to perform due diligence before purchase and therefore they may choose not to engage and make an offer.

 

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