Selling Your Home at Auction: Advice & Guidance
Selling a house at auction isn’t the first route many people think of taking.
But, under the right circumstances and for certain types of property, it’s definitely worth considering.
Here’s what you need to know before getting started.
Selling your home at auction – pros and cons
There are both advantages and disadvantages to property auctions. It can depend entirely on the individual circumstance and situation!
There are both advantages and disadvantages to property auctions. It can depend entirely on the individual circumstance and situation!
The positives
Quick
Firstly, it’s quick. Once the hammer falls, it should be a speedy, uncomplicated process. This is good news if you’re looking to move somewhere quickly, perhaps for a job, or if you need the sale money fast.
Buyers are committed
Secondly, with house auctions, the deal is certain. The highest bidder is legally committed to buying your house, so you don’t have to worry about them changing their mind.
Contracts are exchanged, and the 10% deposit paid once the hammer falls. They then have a month to pay the rest.
No chain
Also, there’s no property chain. The highest bidder will have a timeframe in which to complete the purchase, so you don’t have to worry about a chain scenario and the problems that can bring, namely delays.
Bidding sparks competition
Auctions offer competitive interest a lot of the time. Hopefully, you’ll have more than one bidder interested in your home and multiple bids is only ever a good thing as it can help increase your price.
Others bidding high will often encourage others to go higher, which can go in your favour.
Good for a variety of properties
Auctions are good for unusual properties. Many property auctions are dilapidated or unusual in some way.
People come to property auctions looking for good value, and so properties that need work, or aren’t traditional in appearance, often sell more easily in this environment.
The downsides
Despite the positives, there are some inevitable downsides to selling your property via a home auction.
Auction fees
They can be expensive. Auction houses charge in the region of 2.5% on the hammer price achieved, which is more than most high street estate agents.
The cost of selling a house can be high as it is, so this will be an extra fee on top.
Binding
Also, they’re binding. Once the hammer falls the buyer can’t back out – but neither can you. Be certain it’s what you want before you commit to sell.
If you feel you’re being pressured to sell at auction, speak to your solicitor.
Lower sale prices
In some cases, properties can sell for a higher price than on the market than at an auction.
At auction, it’s likely to sell for 70-80% of the true market value of the property. Accepting that this may be what the property sells for is the true test of whether selling at auction is for you!
Want a handy checklist?
Ensure you fully understand the process of selling your home at auction! Download this checklist to help you – it’s free to sign up and access.
How to sell your property at auction
Think selling at auction is the right option for you? Here’s some advice on how it’s done:
How to choose an auction house
Don’t be driven purely by price. Sometimes, the auction house with the higher fees may be better known and have better attended auctions. Therefore, this can get you a better sale price.
However, a smaller auction house may be more flexible in their terms and have better fees.
Speak to a variety i.e. local operatives and larger companies. Ask three or more to visit the property and value it for you so that you have multiple opinions as to what to set the guide/ reserve price at.
Look at promotional material
One of the most important things to look at is their promotional material for other properties, do you trust them to market your property well to potential buyers?
Make sure you quiz whoever you speak to to ensure there will be plenty of people attending the auction your property is to be listed in.
Look at an auction house’s upcoming auction and check that they are used to or known for selling properties like yours.
How to decide on the reserve price
The reserve price is the minimum price you would be willing to accept for your property. Be realistic about this price and make sure you would have no regrets if it is the value you manage to achieve at auction. This is kept private from buyers.
Knowing how much your home is worth here will help.
As with all methods of property sale, don’t always pick the highest valuation or the lowest fee. Take a balanced view of the feedback you get and pick the auction house who is likely to get the most buyers in the room on the day.
How to decide on the guide price
The guide price is what buyer’s will see: it will ideally lure them in.
Your chosen auctioneer will help you set the guide price on their property. So, it’s very important to do your research and make sure you pick someone who has recent and relevant experience with properties that are similar to yours.
Auctions tend to be quick and cheap, so don’t insist on the same value a high street estate agency gave you. A house for auction is there to sell in a matter of minutes and buyers tend to be landlords or bargain hunters with a specific amount of cash in their pockets.
The aim of an auction is a guaranteed sale and not necessarily at top dollar.
What happens during the auction appraisal?
A member of your chosen auction house will visit your property and judge its suitability for auction.
How to put your property at an advantage
A property for sale at auction needs to look its best.
Many auction properties are small and often look pretty unloved. It isn’t hard to set your home apart by ensuring it’s clean and well presented.
While you may not have too much input into what the auction house puts in their marketing material, try your best to ensure that any photos are light and bright and show the space at its best. Use a property logbook to store all the details about the property making it all easily accessible for its new owner.
Selling at auction advice
You’ll need a conveyancer every step of the way, from producing a legal pack to providing guidance.
Need a solicitor quickly? Tell us your requirements and we’ll connect you with a professional. Get conveyancing quotes below.
What happens next?
Once the hammer falls, the sale should be completed within 28 days. While, for many, a speedy sale is an advantage, you need to ensure you’re ready to be all moved out for that deadline. Get prepared in advance and make sure you have everything you need, e.g. important documents.
Want another option?
The modern method of auction has opened the market, creating more opportunities.
Selling via an online auction is quick, easy and removes a headache. They’re carefully managed and don’t require the seller to put forward any fees – only buyers.
Online property auctions also drum up more potential interest, as they’re highly accessible; combining local estate agent knowledge with ‘eBay’ style buying and selling. Get started below.
Last Updated: November 1st, 2024
