Rated Excellent
How To Sell Your Home At Auction
There have never been more options open to the prospective property seller than there are now. From fast cash buyers to part-exchange and traditional estate agent sales, the choice is yours – so why do some favour the age-old process of property auctions, and what exactly does it involve?
Why Sell At Auction?
Offering a house for auction can provide the seller with some benefits not traditionally associated with other methods of selling. Those seeking a quick sale are drawn to home auctions for their immediacy: as soon as the gavel falls, the buyer must pay a percentage deposit, and is obliged to complete the remainder of the transaction quickly – usually within 28 days[1].
The competitive nature of bidding for a property at auction can also drive up the final price. As bidding continues and confidence increases, your property moves closer and closer to achieving its best possible price. And when the hammer falls, the price agreed is the price paid – no renegotiation can take place[2]. This added certainty is another appealing reason to forgo the local area estate agents.
House auctions frequently attract different types of prospective buyers – property auctions are well known as a favourite hunting ground for those looking for an unusual project, or one which will require a substantial amount of work to be done. If you’re finding it difficult to attract interest with conventional buyers, property auctions could be the solution – pick the right auction house and your property might quickly be found by the elusive perfect buyer.
Can You Set A Minimum Price To Sell At?
When properties are placed in house auctions, all potential buyers will see ‘guide prices’, which – as the term suggests – offer rough guides to the value of the house auctions. This may not necessarily represent the final price, and could also be presented in the form of a price range.
However, as the seller, you will agree another figure – the ‘reserve price’ – confidentially, with the auction house, before the house auctions take place. The buyers will not be aware of this value, but if bidding does not meet or exceed it, your property will not sell. As a seller, you’ll need to strike a balance between a low reserve, which increases the likelihood of achieving a sale, and a high reserve, which guarantees a higher final price – if the bidders make it there. Note that in property auctions it is not usually possible to pick any value you like – often, auction houses require a reserve price that falls within a certain percentage of the guide price[3].
What Should You Do Before Auction?
As with any property sale, it’s in your interest as the seller to ensure that the house for auction appears as well-presented and attractive as possible. You can expect your auction house of choice to market your property – but just like selling with an estate agent, that doesn’t mean that you can’t help spread the word yourself. After all, the more people who know about the sale, the more potential buyers there will be to push up the bidding and increase your chances of selling quickly.
Your first big decision ahead of selling your property at auction will be to pick the best auctioneer for you and your house. Just like estate agents, some auction houses will specialize in a type of property or a geographical area, so it is vital to do your research before committing. Fees and processes can vary from one to the next, so it pays to be thorough – do your research and follow guides available online[4].
When you have made a selection for your house auction, you’ll need to arrange a period of time to make the property available for viewings. Due to the nature of auction sales, this is usually a comparatively short time. It may be advisable to speak to agents in the local area to get an idea of what the property is worth, and with this knowledge, you can decide on the most appropriate reserve price ahead of the property auction itself.
NATIONAL HOMEBUYERS PROPERTY EXPERT says: “If you have the time, it may be beneficial to attend an auction for a property similar to your own in your local area. You’ll get a first-hand demonstration of the process your property will go through, which can help you to prepare for your own big day!”
How Much Does Selling At Auction Cost?
You’ll need to bear in mind that the auction house will charge a commission on the sale. This is likely to be in the region of 1-3%, plus VAT – considerably more than the typical estate agent fee which lies around 1.42%[5].
You’ll also need to pay solicitor’s fees for the preparation of a legal pack for the sale which includes documents such as the property information form, tenancy agreements, planning permission documentation and more. This usually costs something in the vicinity of £200[6].
Most, if not all auction houses will also charge an entry fee[7]. This covers costs such as listing your property in the auction house’s catalogue, and the amount can fall total anything from a few hundred, to a few thousand pounds. Unlike the commission charge, which is only payable once the sale has been agreed, you may have to pay the entry fees again if the property doesn’t sell and you need to relist.
Some sellers are able to pass on these additional costs to the buyer by adding a clause into the sale contract – another benefit of selling by auction – but beware: buyers may be wise to this and it could cause them to bid a little lower to compensate.
Will Your House Sell At Auction?
With the exception of some fast property buyers, very few property sales methods can offer a 100% guarantee that your house will sell. Any property can linger on the market without tempting buyers for a variety of reasons: perhaps the asking price is too high, maybe the images in the marketing material don’t do it justice. It could even be the wrong time of year, or simply a property that is fundamentally difficult to mortgage for many other possible reasons[8].
So many factors affect the speed and likelihood of completing a successful sale that simply choosing to sell via property auctions is not a realistic way to guarantee a sale. While it’s true that an auction sale can suit certain properties much better than selling via an estate agent or other methods, when all is said and done, if buyers’ interest isn’t piqued, the property won’t sell. It’s down to the seller to prepare well and do their research – no matter the sales medium – to ensure that their house has the best possible chance from the outset. This can mean lowering expectations with regards to the final sale price, re-evaluating the way the house is presented, or even exploring other ways to sell.
Can An Auction Guarantee A Quick Sale?
On average, it took 102 days to sell a property in the UK in 2018 – six days longer than it took in 2017[9]. With the possibility that this trend could continue, many are turning to other means of selling with a view to speeding up the process. One such option is listing the house for auction. As noted above, one of the key benefits to selling via property auction is the speed with which the process can be completed once a sale has been made. A far cry from the often lengthy, drawn-out ordeal of selling with a traditional estate agent, the winning bidder in a property auction will usually be required to place at least a 10% deposit on the property on the very day of the auction, with the remaining balance due within a month[10]. For those fortunate enough to achieve a bid high enough to clear the listed reserve price, house auctions can prove very beneficial if a swift sale is desired.
Of course, that rapid completion procedure can only occur once a sale has been achieved, and merely opting for a property auction sale is not enough to guarantee this achievement. NATIONAL HOMEBUYERS PROPERTY EXPERT has this advice:
“When speed is truly of the essence, your traditional estate agent might simply take too long. House auctions can move along quickly in terms of completing an agreed sale – but only a fast cash buyer like National Homebuyers can guarantee to not only make you an offer, but to make every effort to do so within a timescale that suits you.”
What Are The Alternatives To A House Auction?
What options are there for selling your house if property auctions don’t quite fit the bill?
- If time is not a factor, traditional local or national estate agents. While they may charge various fees, their knowledge of the region and of the property market can be valuable – but be prepared to wait.
- Online estate agents can offer similar advantages to a high street agent, with generally lower rates – but are you missing out on the specific local area knowledge and marketing of a traditional high-street estate agent?
- If you need a good result quickly, consider using a fast cash buyer such as National Homebuyers[11].
Compared with house auctions, National Homebuyers can offer a quicker turnaround, a lot less hassle and are guaranteed to make you an offer, regardless of the condition or value of your property. If you’re considering selling your house via property auctions, why not give National Homebuyers a call first?
[2] – https://www.moneysavingexpert.com/team-blog/2013/09/property-auctions-can-you-bag-a-bargain/
[3] – https://www.auction-link.org.uk/what-is-an-auction-reserve-price/
[5] – https://www.fridaysmove.com/property-auction-fees/25162
[6] – https://www.auction-link.org.uk/auction-fees-for-selling-property/
[7] – https://www.auction-link.org.uk/auction-fees-for-selling-property/
[9] – https://www.bbc.co.uk/news/business-46219904
[10] – https://www.auctionhouse.co.uk/guide/when-do-i-pay-my-deposit
