So, how much are auction fees? Well, it turns out many people are confused about auction fees and are keen to find out how much auctioneers charge to sell a house at auction.
If you need a quick sale, property auctions can be thrilling and potentially rewarding, however get it wrong and instead of getting a dream come true and selling your home, you could end up with an expensive nightmare.
If you’re asking ‘can I auction my own house?’, then the answer is yes, but you need to consider the auction fees and commission charged by the auction house.
Auction fees for sellers can be very expensive, and if your property is left unsold on the day of the auction, you may feel like you’ve wasted a lot of money.
If you want to know exactly how much do auctioneers charge to sell a house, we’ve compiled everything you need to know about auction fees and commissions, along with your alternative options.
How much does it cost to auction a home?
Before going ahead, you need to get a proper understanding of auction fees – what is fair and what your alternative options could be.
So, ‘how much are auction fees’, you ask? Turns out, they’re a lot more than many people think.
There has always been significant variation in property auction fees and commissions charged by auction houses. However, this has recently broadened even further, particularly with the rise of online property auctions.
These new ways of charging auction fees and commissions are usually hidden in the small print, so whilst you may think you’re selling in a 100% no fee online auction – chances are, this isn’t the case.
The golden rule is to read the small print, as that’s where you’ll find the hidden fees. Remember, small print is small for a reason – and most people don’t bother to read it.
If you’re already rethinking the idea of selling your property at auction because of the high auction fees but still need a quick sale, Property Saviours could provide you with an alternative solution. Find out more about what we offer, here.
How much are auction fees?
Typically auction houses charge an ‘Entry Fee’ which can range from £500 – £1,000.
This cost is to cover the cost of entering the property into the catalogue. These auction fees are paid upfront, way before the date of the auction. This is one of the disadvantages of an auction. Would you pay someone before they’ve even done the work?
Alongside this, supplementary fees may also be proposed for advertising and promotional costs. These auction fees for sellers are also usually non-refundable.
Auctioneers commission rates
If the property is successfully sold, the seller will be charged an auctioneers commission rate, which can end up knocking a huge amount of money from the final selling price.
Typically, this commission will be between 2% and 3% of the final sale price. However, the auctioneers commission rates don’t usually include VAT – which means even more of your money is deducted.
Another disadvantage of an auction is that the buyer can still pull out of the sale, even after the hammer falls. There is no guarantee with an auction, and often, there is a lot of risk involved.
To make matters worst, sellers may also face penalty property auction fees if they fail to complete after exchange, or if they withdraw the property before the day of auction.
Those querying auction fees and asking ‘how much are auction fees?’ need to be aware of this, as it is common to advertise a property elsewhere in the run up to the auction.
Another cost to consider when asking ‘how much are auction fees?’ is the solicitor fees.
The legal fees massively impact how much it costs to auction a house and all sellers need to be aware.
The solicitor will need to prepare a legal pack, which potential buyers will review prior to making an offer.
The fees for legal packs can differ depending on the solicitor, but they generally cost around £750-£1,500 to produce, and possibly much higher in London and M25 areas.
It will include all the information which is required to formulate an offer on a property.
Cost of selling at auction
Whilst the cost of selling at auction varies, from the entry fees to the auction house commission, not to mention the legal fees, the final bill can potentially add up to thousands of pounds. So, precisely how much are auction fees? Let’s work it out. When you first agree to sell a property at auction, you pay the entry fee. Depending on the auction house you choose to sell with, this can vary from £500 to £3,000.
When you choose to sell a property at auction, you’ll want to ensure it is seen by as many potential bidders before the day of sale. However, the more the property is advertised by the auction house, the more cash it’s going to cost you.
So, if you simply just want your property to appear in the auction catalogue, you’ll pay a lower auction entry fee, however if you are keen to get a quick sale and want extensive marketing chances are you’ll be asked to pay a four figure sum.
Delving deeper, let’s do the maths on auction house commission rates. How much is auction commission?
So, how does auction commission work? Let’s say your property is successful when it goes to auction – and meets the reserve price you’ve set.
If you’re property sells for £150,000 and the auction house commission rate is 2.5%, you’ve just lost £3,750.
Then you need to add VAT, which subtracts another £750. You’ve just lost almost £5,000 just from the auction house commission fee.
When adding this to the entry fees, which because you are keen for a sale and want to market your property to its full potential, are £3,000 – that’s almost £8,000 in fees.
So, when you ask how much does an auctioneer charge? The answer is a LOT of cash.
How much are auction fees and who pays auction fees?
Between the seller and the buyer, a lot of auction fees are charged. How much are auction fees? Doesn’t provide a simple answer, and there are complexities for both parties involved.
Property auctions involve fees for buyers and for sellers. For sellers, the property auction costs are expensive, and for buyers they can also be very complicated, which puts a lot of people off bidding in the first place.
Buyers are advised to read the auction legal pack, however sellers should be aware that a lot of the time once they’ve seen the hidden fees in there, they close the book and move on.
When looking at who pays auction fees, it’s important to consider the fees that buyers are charged at auction, as often there will be fees involved for a buyer which they wouldn’t get if they were buying from an estate agent.
Firstly, there is a buyer’s premium, also called an admin fee. This is an additional auction fee that the buyer will have to pay to the auctioneer. This can vary from £750 to £1,000, but could be even more depending on the auction house.
When it comes to property auction costs, a lot of bidders don’t take these hidden fees into account, and can end up resulting in them pulling out or not bidding at all.
If the buyer doesn’t check the cost of auction fees before placing a bid, they might realise they don’t have enough budget and leave you short of a completed sale.
On completion the buyer will have to pay another sum of around £500 towards their auctioneer. Again, this puts a lot of interested parties off and makes them think it’s not worth the money.
It could be £500 towards their holiday fund, and if the potential bidder is savvy, they’ll know it’s included only as an extra way for an auctioneer to get more money.
An increasing number of buyers are becoming wise to the fees at auction, and they are aware that at the end of it all they’ll be stung with over £2,000 worth of hidden auction fees.
Selling at auction fees
We’ve already answered the basics of how much does an auctioneer charge to sell a property, but now we’ll take into account any other sneaky sums that might be slapped on the bill at the end of a sale. With the entry fees and the auctioneer commission rate, you’ve already lost thousands of pounds, but what about the other property auction costs like legal fees?
We’ve established that legal fees can cost up to £1,500 or more, but what if something goes wrong beforehand? When asking how much are auction fees, remember, a solicitor will definitely charge you for every minute of their time, so be wary of asking them for advice that you think is free – as it will probably be added to your bill.
If you think you don’t need a solicitor and can do it yourself, you’re also going to be stung unless you have a lot of time, and a lot of knowledge. When selling a property at auction you by law must have a legal pack prepared. A legal pack is the set of documentation including:
- Official Copy of Register of Title (Office Copy Entry)
- Land Registry and Local Searches
- Special Conditions of Sale
- Property Information Form
- Fixtures and Fittings Form
- Management Information
- Tenancy Agreements
- Planning Permission Documentation
If the legal pack contains a mistake, you’ll not only be breaking the law but it could end up costing you a lot more money and time to get it corrected.
Another consideration when negotiating the cost of selling at auction is the legal action or advice you’ll need if the buyer backs out. This isn’t an ideal situation, but it’s a risk, so you must be prepared.
The TRUE cost of selling at auction
Now we’ve looked at how much auctioneers charge to sell a property, we’ll look at the true cost of selling at auction associated with the risk of selling. Moving slightly away from the question ‘how much as auction fees?’ We’ll now look at the auction industry on a wider spectrum to show just how high-risk an auction can be for a seller.
New research from Essential Information Group reveals that last month saw only 144 auctions held across the UK – the fewest number recorded in September since 2006.
This had an obvious effect on the overall monthly results as properties offered at auction were down by 11% when compared to figures from September 2017. Across the UK 3,378 properties went to auction, however only 2,382 lots were sold. This is a huge 17% drop in sales from 12 months ago.
Northern Ireland fared the worst, with just 69 properties being successfully sold last month, and over 50% being left on the shelf. Adding to this, total auction revenues fell by almost 18% – an £80M drop in monetary terms and a clear indication that the cost of selling at auction is a high price to pay in terms of risk.
How much are auction fees – the harsh reality
After reading the true cost of selling at auction, and getting a wider knowledge of the auction house industry, you’ve probably figured that now is definitely not a good time to sell a property at auction. But is it ever a good time to sell a property at auction?
Whilst we can’t make predictions on the future market, we can take a further look at previous months and how many properties didn’t sell at auction. In July 2018, auction revenue dropped 24% from 12 months previous and there was a 19% drop in properties being sold by auction. Whilst there are more auctions taking place in large cities such as London, it’s important to consider that the number of properties being sold is decreasing – and fast.
A report from the Essential Information Group states that growing speculation of an impending interest rate rise, Brexit uncertainty and ongoing high-street woes are all factors that are likely affecting confidence amongst buyers and sellers alike.
How much are auction fees? Auction vs private sale
Recent reports suggest that it isn’t just the auction market feeling the strain, however, with news of decreasing numbers of private buyers causing a slowdown in sales and putting downward pressure on prices.
With that mind, you need a reliable solution to selling your property and we could be the answer to the problem you face when trying to sell a property at auction.
Here at Property Saviour we believe that the cost of selling at auction is too high, both in price and in risk factor. Why would you spend thousands of pounds on auction fees when the chances of selling your property are rapidly decreasing?
Thankfully, that’s why we’re here – and this is where we can help you avoid paying the price of selling a property at auction.
Take a look below to see what we can do for you.
What are the alternative options?
Now you know the true cost of selling your property at auction, you may be feeling a little overwhelmed. Auctions are expensive, and as noted earlier, there is no guarantee of a sale.
If you need to sell your property quickly and want to avoid paying hefty auction fees and commissions, that’s where we can help. At Property Saviour, we can make you a fair offer for your property – and buy it for cash.
You won’t have to worry about us not completing the sale or pulling out last minute, like you would at an auction.
We don’t buy properties on behalf of investors, we purchase them for ourselves. This means there are no hefty contracts to sign, and we promise to buy your home and complete the process within five to 10 days.
Sounds good, right?
Further to this, we won’t charge you any of those nasty auction fees and we’ll even pay £500 towards your legal fees.
Why? Because we understand, and more importantly, we care. We don’t you to feel like you’re having your hard earned cash snatched from your hands, and we don’t want you to lose out when you sell your property at auction or private sale.
Alongside this, we know that finding the most effective way to sell your property is crucial, and we don’t want you to make the wrong choice.
It costs nothing to get in touch and speak to us about exploring all possible options, so give us a call or drop us a line.
We’re here to help you sell your property quickly, efficiently, and with the least amount of hassle. It’s worth a shot. Call us on 0113 320 6700 or get a free offer here.