Property auctions are extremely exciting! Whether you’re a buyer or seller they definitely have an “edge of the seat” quality to them. As a seller auctions give you the opportunity to reach a whole new set of qualified house buyers. Read on to find out how to sell your home at a property auction. Or, if you’re in a hurry read our top tips for selling property at auction.
Property auctions can give you a quick sale. A few private sellers like you, are choosing to sell through the sale room.
Reason? Well two reasons. There is a set timetable for the sale – 28 days or less. Ideal if you’re looking to sell your house quick.
Also, in today’s market, if the marketing is done correctly, you probably will get a good price. This partly explains the increasing number of properties being sold through the sale room – at ever higher prices.
The average price of an auction lot rose a whopping 30% during 2007. What’s more these days around 50% of the people attending residential auctions are cash buyers. The two statistics are almost certainly linked.
Here you will find out precisely how to sell your house at auction:
– A short history of property auctions
– Which houses can sell well and why?
– Why to achieve a good price in the sale room
– How to use to your advantage to sell your house fast
– The advantages of selling through property auctions
– The risks of selling at auction
– How to control the risks
– How to choose an auction company
– How do property auctions work
– How to attract a bid on your house
– The main things to consider when selling property at auction
The first question to consider is if a property auction is the right place to sell your property. But before we dwell into that it’s important to have some background on property types and who has been buying at auctions. The house auction scene has changed quite spectacularly in recent years.
The advantages of selling at a property auction
You get a commitment to purchase. The contract of sale comes into force as soon as the gavel falls.
The timeframe is usually a lot shorter than for properties sold via estate agents. Perfect if you want to sell your house quickly.
The format lets bidders drive up prices. Competitive bidding at a house auction for some types of property can achieve close to open market or may be better prices.
You won’t be messed around by buyers (or at least the possibility is extremely remote). There’s no room for re-negotiation or gazumping. All this assumes a reasonable reserve and guide price. But more about that later.
The risks of selling at a house auction
The main risks associated with selling your house at a property auction can be summarised as:
• your property may not sell
• your buyer may fail to meet the completion date
• you may still incur costs if your property sells before the auction
Should you sell your house at auction?
Any auctioneer will be happy to discuss the pros and cons of selling your house at auction. The auctioneer will take your particular circumstances into consideration.
In fact, to get legal for a moment, auctioneers (and estate agents) are both bound by a ‘Duty of Care’. As a potential vendor, they are obliged to advise you on the best method of selling your property, taking into account the circumstances under which you are selling. This should be part of your discussion with the auctioneer when your property is appraised by the auction house. Other methods of sale the auctioneer might advise are via estate agents (‘By Private Treaty’) or by tender.
How property auctions actually work
The mechanics of selling your house at auction are actually very simple:
• you pay entry fees and sale fees
• you set the minimum price (reserve price)
• bids are made in an open, competitive environment so the sale price achieved is public knowledge but..
• you can’t choose the buyer
• the highest bid wins as long as it meets or exceeds the reserve
• bidders can make as many bids as they want to
• your prepare the legal pack with your solicitor
• the contract to buy and sell is made as soon as the gavel falls
• the whole process takes a maximum of 28 days – ideal if you want a quick sale
On the money side of things fees are generally of two kinds: entry fees and sale fees. Entry fees are non-refundable. As a rule of thumb they cover the advertising of the sale. These can run to several thousand for the top London auction houses. The sale fee is a commission based charge and is typically between 1.5% and 3.0% of the final selling price.
It is not necessarily in your interest to choose the auctioneer with the lowest fees. You should be asking yourself is the auction house “fit for purpose”? Another consideration might be the way the auction house sets reserve and guide prices. This is one aspect of selling houses at auction that is not as simple as it should be.
Tip: You’ll get the best price for your property at auction, selling either at an established local auction or a big London auction. These will attract the highest offers. All things being equal avoid selling in July and August at auction if you can.