How to sell a property at auction
Published by Property Saviour
The UK's No.1 Fast House Sale Company
October 13, 2018 - Read time: 3 minutes
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.
If you are interested, here’s how to sell a property at auction and everything you need to know before signing the dotted line.
Is auctioning a house a good idea?
When it comes to finding out how to sell a property at auction, you firstly need to know if your property has a chance of selling.
Many people who ask the question ‘can I auction my own house?’ are swept away in the romance of an auction sale, in the hope that their property will sell for more than they asked for.
It’s true, having multiple bidders can drive up the price at a house auction, as they won’t want to miss out on the chance to own your property.
It can often seem like a guaranteed win, as once the hammer falls the buyer has to pay a 10% deposit, then they have 30 days to give you the remaining 90%. This is often seen as one of the advantages of auctions.
However, there are disadvantages of auctioning your home, too, as the auctioneer gets paid before the seller. Upon fall of hammer, contracts are exchanged and auctioneer gets paid first.
Here at Property Saviour we think this is unfair, as sale has still not completed.
If you do successfully sell at a house auction, the completion date usually follows 28 days after the sale date, which can again, seem like a win if you want a quick sale.
When considering the disadvantages of auctioning your home, remember that not all properties are successful, and more often than not sellers are left disappointed – especially after paying the auction fees for selling.
Around 28% of properties fail to sell at auction, according to recent figures Essential Information Group. You have to consider whether that’s a risk you’re willing to take.
If you have an unusual or run down property you may struggle to gage interest from conventional buyers, and whilst expert buyers often attend, if the right person isn’t at the house auction on the day, chances are it might not sell.
If you are desperate for a quick sale, you may think it’s worth taking a chance, but it’s also worth remembering it’s not the only solution to selling your home quickly.
Find out more about what we can offer, here.
What happens when I commit to selling at auction?
When considering how to sell a property at auction, you’ll need to be aware of the finer detail before you commit.
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 which will be used when promoting the property.
A guide price is a marketing figure, which is used to guide potential buyers as to how much a property could be worth.
Be aware, a guide price is just an estimate, and what happens on the day of the auction is out of the auctioneers control. This is another disadvantage of auctioning your property.
Can I set the price?
Price is another factor that you need to consider when looking at how to sell a property at auction.
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, efforts and money. This is obviously one of the huge disadvantages of auctioning your home.
Also, the reserve prices for unsold properties will be revealed to the public. This means everyone will know your lowest sale price, putting you on the back foot for negotiations.
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 you want 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 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 now set at 28 days from this point.
With a conditional auction, once the deal has been agreed, the buyer has a 28-day exclusivity period. This allows them to carry out their due-diligence.
After this 28 exclusivity, the buyer then has a further 28 days to complete, in a similar way to a traditional auction completion period.
Many people who want a quick sale will go ahead with an unconditional auction, however a lot of buyers would rather partake in a conditional auction as it gives them more time and more freedom.
How to auction a house online?
A bit like eBay, you can sell your property online, allowing bidders to participate in a virtual auction.
Bidders will register their interest, provide ID and then gain access to the bidding system.
E-auctions can offer properties unconditionally, or alternatively, lots can be offered on a conditional basis with the winning bidder securing a period of exclusivity to arrange any mortgage funding before exchanging contracts.
A disadvantage of an e-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?
When looking at how to sell a property at auction, you’ll need to consider the auction fees for selling.
It is a lot more expensive than selling through an estate agents or making a private sale.
As the process is much faster, there are extra costs involved – including the auction event itself.
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.
An entry fee is a charge paid by the seller to the auction house. This charge covers the cost of entering the property into the sales catalogue, along with 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 exchange of contracts.
Auction house commission rate – what is fair?
One of the disadvantages of auctioning your home is the auction house commission rate.
The auction house commission rate is charged by the auctions team for successfully selling the property. It is invoiced after exchange of contracts and usually deducted from the deposit paid by the purchaser.
The auction house commission rate is agreed between the seller and auctions team, with rates of commission varying, depending on the auction house and the location.
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 assist you with the legalities throughout.
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, and 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 5 to 10 days.
Property Saviour can exchange contracts quickly without waiting months for next auction, with no upfront costs or auctioneer’s fees.
Alongside this, we offer free valuation and will pay £500 towards your legal fees. We offer a free Energy Performance Certificate, along with free house clearance, and we’ll beat all genuine cash offers.
It’s a huge decision to make, but it costs nothing to give us a call and have a chat with our experts about your options.
Get in touch, here or call us on 0113 320 6700.