How to sell a property at auction? This question has become increasingly relevant as more UK homeowners turn to this fast-paced and potentially lucrative method of selling their homes.
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.
Table of Contents
How to Sell a Property at Auction?
Auctioning a property involves a series of steps that, when executed correctly, can lead to a swift and profitable sale. The process requires careful preparation and an understanding of the auction market.
What are the steps to selling a property at auction?
- Choose an auction house
- Get a valuation
- Set a reserve price
- Prepare legal documents
- Market the property
- Conduct viewings
- Attend the auction
- Complete the sale
Each step plays a essential role in ensuring a successful auction sale.
How do I choose the right auction house?
Selecting the right auction house is fundamental to your success. Look for auctioneers with experience in your property type and local area. Consider their track record, fees, and marketing reach.Tip: Request performance data from potential auctioneers to compare their success rates and average sale prices.
What is a reserve price & how do I set it?
A reserve price is the minimum amount you’re willing to accept for your property. It’s typically set at 10-20% below the property’s market value to attract bidders. Your auctioneer can advise on an appropriate reserve based on current market conditions and your property’s unique features.
How long does the auction process take?
The auction process is significantly faster than traditional sales methods. From instruction to completion, it can take as little as 8-10 weeks. This speed is particularly appealing to sellers needing a quick sale.
What are the costs involved in selling at auction?
Auction fees can vary, but typically include:
- Entry fee: £200-£500
- Commission: 2-3% of the sale price
- Marketing costs: £300-£500
- Legal pack preparation: £500-£1,000
Tip: Factor these costs into your reserve price to ensure you achieve your desired net sale amount.
How is the property marketed before the auction?
Auction houses employ various marketing strategies to attract potential buyers:
- Online listings on property portals
- Social media campaigns
- Email marketing to investor databases
- Traditional print advertising
- Open house viewings
Effective marketing is key to generating interest and competitive bidding.
What happens on auction day?
On auction day, registered bidders compete to purchase your property. The auction can be conducted in-person, online, or via a hybrid model. If the bidding reaches or exceeds your reserve price, the highest bidder wins and contracts are exchanged immediately.
What are the pros & cons of selling at auction?
Pros:
- Speed of sale
- Certainty of completion
- Potential for competitive bidding
- No chain complications
Cons:
- Higher fees compared to estate agents
- Risk of selling below market value
- Less control over the final sale price
- Pressure to accept the highest bid if reserve is met
How does the completion process work after a successful auction?
After a successful auction, the process moves quickly:
| Timeframe | Action |
|---|---|
| Auction day | Contracts exchanged, 10% deposit paid |
| Within 28 days | Remaining 90% paid, sale completed |
This swift completion is a significant advantage of the auction process.
Can I sell a property at auction if it has a mortgage?
Yes, you can sell a mortgaged property at auction. However, you must inform your lender and ensure the reserve price covers the outstanding mortgage balance plus any fees. Any surplus will be returned to you after completion.
What types of properties are best suited for auction sales?
Auctions can be particularly effective for:
- Properties in need of renovation
- Unusual or unique properties
- Tenanted properties
- Properties with short leases
- Those requiring a quick sale
These types of properties often attract investors and developers looking for opportunities.
Benefits of Selling at Auction
Selling a property at auction can be a quick and efficient way to sell your property. Here are some benefits to consider:
- Speed: Auctions can be completed within a few weeks, which is much faster than the traditional estate agent route.
- Certainty: Once the hammer falls, the sale is final, and you can be sure of a quick completion.
- No Chain: Auctions eliminate the risk of a chain breaking, which can be a major advantage in today’s housing market.
Risks of Selling at Auction
While selling at auction can be beneficial, there are also some risks to consider:
- Low Prices: Properties sold at auction often go for lower prices than they would through traditional means.
- Fees: Auction fees can be high, and these costs will be deducted from the sale price.
- Uncertainty: You can’t guarantee a sale at auction, and if the property doesn’t sell, you’ll be left with the costs of the auction process.
Tips for Selling at Auction
If you do decide to sell your property at auction, here are some tips to keep in mind:
- Set a Realistic Reserve Price: Make sure your reserve price is realistic and takes into account the current market value of your property.
- Choose the Right Auction House: Research and choose an auction house with a good reputation and a proven track record of selling properties like yours.
- Prepare Your Property: Make sure your property is clean, tidy, and well-presented to attract potential buyers.
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?
Auctioneers charge between 2-3% plus VAT of the final sale price as their commission.
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.
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?
Yes property auctions can be 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?
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 today to request your call back.
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