When you want to sell your property quickly, finding out how to sell a property at auction may seem like an exciting option.
At an auction, it’s possible bidders will drive up the price of your property – meaning you get a quick sale and a great deal.
However, before committing to go ahead, you need to know the pros and cons of auction sales, because all though your heart is bound to be racing on auction day, you don’t want it to be for all the wrong reasons. Auctioning a house isn’t for everyone though.
If you are interested, here’s how to sell a property at auction and everything you need to know before signing the dotted line.
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What happens when I commit to selling at auction?
When considering how to sell a property at auction, you’ll need to know the finer details before committing:
- The auction process begins with an inspection of your property and an assessment of its suitability for sale by auction.
- If it is suitable, an auctioneer will give you a guide price for promoting the property. Even if a property isn’t suitable for auction, the auctioneer is unlikely to tell you.
- Be aware a guide price is just an estimate, and what happens on the auction day is out of the auctioneer’s control. This is another disadvantage of auctioning your property.
- The auction process begins with an inspection of your property and an assessment of its suitability for sale by auction.
Can I set the guide price?
Setting a low guide price is key to auction success by getting two or more bidders to bid it up. Be careful, though, a low guide price means you could end up giving away the property.
Auctioneers will take ‘bids off the wall’ a technique used to bid up your property right up to reserve price and then when someone puts their hand up, let them have it!
Many sellers set a reserve price to ensure their property doesn’t sell for less money than they want. They see this as one of the advantages of auctions.
On the other hand, properties that do not meet the reserve on the auction day are withdrawn from the sale.
This can often leave the seller feeling disappointed and as though they’ve wasted their time, effort, and money. This is one of the huge disadvantages of auctioning your home.
What’s the difference between a conditional and unconditional auction?
How to sell a property at auction isn’t as simple as you think.
When you agree to sell at auction, you can choose whether to sell in a conditional or unconditional auction.
With an unconditional – also known as a traditional auction, the buyer and seller enter a legally binding contract, which sees the buyer pay a 10% deposit. The completion period is set at 28 days from this point.
Although this is seen as one of the advantages of an auction sale, you need to know that the buyer can still back out after this point, and the completion period is 28 days from this point.
With a conditional auction or Modern Method of Auction, the buyer has a 28-day exclusivity period once the auction has been completed. This allows them to carry out their due diligence.
After this 28-exclusivity period, the buyer has a further 28 days to complete, similar to a traditional auction completion period.
Many people who want a quick sale will go ahead with an unconditional auction. However, many buyers would rather partake in a conditional auction as it gives them more time and freedom. You can learn more about how the Modern method of auction works.
How to auction a house online?
Like eBay, you can sell your property online, allowing bidders to participate in a virtual auction.
A disadvantage of an online property auction is that it can be even more of a risk for the seller and make them feel apprehensive or uneasy.
How much do auctioneers charge to sell a house?
You’ll need to consider the auction fees when looking at how to sell a property at auction.
It is a lot more expensive than selling through an estate agent or selling privately to a genuine cash house buyer.
Most auctioneers will charge you an entry fee, alongside an auction house commission rate, which is charged after the property has sold and contracts are exchanged.
Entry fee – this charge covers the cost of entering the property into the sales catalogue and the promotion leading up to the auction.
This fee is usually paid when you first agree to sell your property with the auction house, but on occasions and with prior agreement, it may be settled on the exchange of contracts.
Auction house commission rate – what is fair?
One of the disadvantages of auctioning your home is the auction house commission.
The auction house commission is charged for successfully selling the property.
The auction house commission is agreed between the seller and auction team, with rates of commission varying depending on the auction house and the location. It can be as much as 3% plus VAT.
What percentage do auctioneers charge?
On average, an auctioneer will take around 2.5% of the sale price, however, the type of property you’re trying to sell, and its estimated value may affect the amount of commission you’re charged.
Remember, you will also need to pay a solicitor to help you with the legalities.
So what happens if my property does not sell in an auction? Don’t panic. We are here to help you even if your property did not sell. Why not call us on 0113 320 6700?
How To Sell A Property At Auction?
Regional figures vary but around 70% of all properties listed with a low guide price sell in auctions. This means that 3 out of 10 properties fail to sell in an auction.
We’ve now had 14 interest rate rises in the last two years. Auctioneers withdraw or postpone lots so that they can increase their ‘higher sold numbers by reducing the lots offered’.
What percentage of properties sell at auction?
Regional figures vary but around 70% of all properties listed with a low guide price sell in auctions. This means that 3 out of 10 properties fail to sell in an auction.
We’ve now had 14 interest rate rises in the last two years. Auctioneers withdraw or postpone lots so that they can increase their ‘higher sold numbers by reducing the lots offered’.
Do houses sell for less at auction?
It depends on the guide price, the property’s condition, its appeal to would-be buyers and its location. If you are selling a house in an auction for £1, it will have lots of people willing to bid on it hoping to grab a bargain.
However, if the same house is listed for sale at £1,000,000 then it may not have so much appeal. Generally speaking, properties listed in auction catalogues are between 50-60% below their true value to get buyers excited.
Is it best to sell house by auction or estate agent?
You’ll achieve a lower price in auction against selling it via an estate agent however, an auctions sale can be concluded within two to three months vs an average of six months via an agent.
If you require certainty and speed of sale, you don’t need to take a risk at auction instead sell it to a cash house buyer.
Do houses sell well at auction?
If a house is priced extremely competitively for example 40% or more discount against its current value and it needs full renovation then it is likely to do well provided that the auction isn’t held in December, January or August AND your auctioneer is good at marketing this home.
Do you pay stamp duty at auction?
Yes, you do however, you may be able to claim back stamp duty if the property is uninhabitable or has no utilities connected to it. Check with HMRC Stamp Duty as rules can change.
In a so-called Modern Method of Auction, the stamp duty is also due on ‘Buyers Premium’ also known as commission for auctioneer and their ‘partner estate agent’. This could leave a seller out of pocket.
Who pays auction fees buyer or seller?
Buyers will be expected to pay an administrative fee and sellers are expected to pay auction entry fees, legal fees, search fees and auctioneer’s fees.
Are house auctions risky?
Risks of selling at auction include the buyers not completing the sale or putting forward their deposit if they feel like the auctioneer is overcharging them for ‘Buyers’ Premium. Equally, a buyer can pull out of an agreed sale and therefore, only their deposit is lost.
In this scenario, the auctioneer still gets their commission even though the sale is abortive. You are ‘encouraged’ to sue the buyer, but litigation is extremely expensive at £300/hour and initial assessment costs you in the north of £2,000 plus VAT.
Why do I need a solicitor to sell a house at auction?
You’ll need a solicitor to prepare the legal pack, order searches and liaise with auctioneer for any queries raised up to day of the auction.
Why do I need a solicitor to sell a house at auction?
You’ll need a solicitor to prepare the legal pack, order searches and liaise with auctioneer for any queries raised up to day of the auction.
What to do if you want to sell your property quickly but don’t want to pay the fees charged at auction?
Now, we’ve covered how to sell a property at auction and discussed the pros and cons of auction sales. You’ll see that it can be a big risk; let’s face it, we aren’t all willing to gamble.
If you want to sell your property quickly with minimal hassle, Property Saviour can help.
As we don’t buy properties on behalf of investors, there are no hefty contracts to sign, and we guarantee to buy your home and complete the process within your timescale.
We offer free valuation and will pay £1,500 towards your legal fees. We offer a free Energy Performance Certificate along with free house clearance.
It’s a huge decision to make, but it costs nothing to give us a call and chat with our experts about your options.
Get in touch, here or call us on 0113 320 6700.
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- These valuations or surveys result in delays and price reductions later on.
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- No long exclusivity agreement to sign because we are the buyers.
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