Online Auctions: Mythbusters Edition
Online property auctions have increased in popularity recently, but many of us still have our reservations.
For some, if you think ‘auction’ you think ‘Homes Under the Hammer’ style properties.
However, it can be a faster, more flexible, secure way to sell…
Time to bust some myths about online auctions.
Myth #1 – They’re for low value, poor condition properties only
Traditionally, selling your home at auction has been associated with run down houses, or fixer-uppers. While it certainly can be true, and many buyers have been known to snap up a bargain, it’s not always the case.
Many unique properties are sold in this way, such as barn conversions and new builds, for example. Some people attend auctions in the hopes of finding an unusual home, rather than a property below market value.
Knowing how much your home is worth is key, you don’t have to under-value it just to get it sold at auction. You set a ‘reserve price’ which is the lowest you’re willing to sell your property for. If this isn’t met, you’re not obligated to sell.
Myth #2 – Online auctions are expensive for sellers
In fact, selling via an online auction doesn’t have to be expensive. While there are still some unavoidable costs of selling a house, such as a solicitor, you don’t always have to spend more than you would normally.
Sellers can be given security by a non-refundable buyers premium. This makes the deal more likely to go through, as buyers show they are committed by paying a reservation fee. Many auction houses also have a ‘no sale no fee’ option. Some even offer a ‘sell your Home for free’ option too.
Myth #3 – Online auctions are a last resort
If your house isn’t selling, there can be a number of reasons for this. Overpricing is the most common culprit for a lack of interest, but there are others too, such as quirky features, or a less favourable location.
Whatever the reason, an online auction shouldn’t be seen as a last resort, or ‘the only way to sell’. You have many options, such as selling your home privately. Ensure you weigh everything up carefully to decide what’s right for you. Don’t make a decision based on desperation to sell.
Myth #4 – They’re rushed
Speedy sales only – right?
Wrong.
Traditionally, buyers and sellers exchange contracts as soon as the hammer falls. However, things have changed.
Online auctions can actually offer more flexibility and realistic timescales, unlike traditional ones. Typically, you’re looking at 56 days to exchange and complete. This allows you to attract a higher amount of buyers, as the process isn’t so rushed.
There’s time for the relevant searches to be carried out, viewings and surveys.
Myth #5 – Residential properties don’t sell
The traditional auction process has been typically associated with property investors, who have been known to overlook residential properties. This puts residential homebuyers off.
This all changes when you take things online. This provides a new solution to buy and sell, with homes proving popular thanks to:
- Easy browsing
- Readily-available details
- Interactive and in real time
- Attracts a wider pool of interest, e.g. owner-occupiers
- The use of local estate agents closes the gap between the marketing and sales process
If a vendor has a compelling reason to sell then online auction can offer certainty of sale.
Myth #6 – Online auctions generate less interest
In many cases, online auctions seem to generate more interest than usual. This is due to a number of reasons, including:
- Buyers can watch bids in real-time online
- Online is highly accessible
- You can attract buyers with a mortgage to arrange
- You can attract international buyers
Myth #7 – They’re limited
Contrary to popular belief, online auctions actually provide the best of both worlds. This is because they’re open to a much wider active audience, an ‘eBay’ style of selling and buying, coupled with the use of local estate agent knowledge and marketing.
Buyer’s can use a mortgage for this style of auction, whereas with traditional auctions, you have to exchange on the day, which limits your audience.
Particularly during uncertain times, people crave enhanced certainty so a quick, secure, low-cost option is very appealing. This is why online auctions are becoming a more prominent, recognised method of sale.
Myth #8 – Online doesn’t generate a buzz
Traditional auction houses are associated with bidding wars, and the buzz fuelling others to get involved. It’s easy to see why some may assume that keeping things online loses that.
However, don’t underestimate the power of transparent bidding. Everything can be watched live, so you can have multiple people driving prices up: just like on eBay.
Properties can sell for far above their reserve prices and agents’ (and vendor) expectations.
Myth #9 – There are more delays with online auctions
Many who attend auctions are ready to go more quickly and won’t be held up by any delays with their mortgage. This doesn’t just mean cash buyers, but those who are prepared and have a mortgage arrangement in principle.
Also, sales are often more secure, as auctions tend to attract less time wasters, but those who are committed. As mentioned, buyers must also often pay a non-refundable premium, making it more likely they’re committed to the sale.
Myth #10 – They’re inflexible
Often, buyers and sellers alike are looking for flexibility. On the surface, it might seem that following the process of an online auction doesn’t offer that. However, greater flexibility is one of the reasons why this way of selling has increased in popularity in recent years.
While fixed, you can often extend time frames should you need to, without facing a penalty. Always check the terms of the sale.
Myth #11 – It’s hard to find a good auction house
Online property auctions are a relatively new way of doing things. While they’re not for everyone, they might just offer the solution you’re looking for to sell your home.
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Last Updated: September 22nd, 2024
