Selling A House At Auction vs a Private Sale
Published by Property Saviour
The UK's No.1 Fast House Sale Company
September 27, 2018 - Read time: 3 minutes
Should you be selling a house at auction vs a private sale?
It’s a tough call, to choose between selling a residential or commercial property via an auction vs a discrete sale. And one where many sellers get their fingers burned in a property auction if they are ill-advised. To sell a property through an auction is a daunting experience for novice property auction sellers, as many auction houses charge upfront fees. So is auctioning your house a good idea?
As a property buying firm, we have purchased properties that later transpired to have major issues and therefore, we are experienced in property auctions and can provide you with the information you need and informing you on your rights as a seller, so it’s definitely worthwhile reading this guide.
In this guide, we will reveal some of the dirtiest tricks used by commercial and residential property auctioneers. Whether you wish to sell a house in an auction or whether you are considering how to sell a commercial property, we believe you should be making an informed decision. Later on, we reveal how you can avoid being just a number in auctioneer’s catalogue, both online and offline.
When it comes to auctioning a house, there are pros and cons to include in your decision-making process.
Avoid becoming a casualty of auction houses by following our tips on the pros and cons of selling your house in an auction. Often an estate agent gets a slice of the commission for referring a property to the auction house. The auction process can take several months to conclude. A professional auctioneer will advice you to put in a low enticing guide price to get people bidding up the property. If your property is the lowest property in the catalogue, it will get pre-auction offers as local investors try to secure bargain property in auctions.
To successfully sell via auction, it is recommended that property is marketed as early as possible, the legal pack is prepared by your solicitor and it is ready for potential buyers as soon as property going live, and allow 28 days for completion to take place. When the hammer falls, the buyer puts down a 10% deposit and agrees completion time of 28 days.
When it comes to selling via auction, the fees auctioneers include can be high. A good achieved price isn’t guaranteed. This is one of the main disadvantages of an auction that are bound to make you feel nervous.
The typical auction commission percentage auctioneers include for residential properties is 2.5% on average, although it can be higher and there are other additional costs that need to be taken into account before thinking about the auction hammer.
Many people looking to sell a house at auction are aware that there will be fees they need to consider before going ahead which could take money from the final price. In the search for a total figure they will look online for an auction fees calculator, however, unfortunately, there isn’t one – and that’s because auctioneers don’t want to reveal these extortionate costs before they’ve reeled the seller in.
In this online guide, we’ll reveal the answers to the questions our readers are searching for, including:
- How much does it cost to sell a house via auction or how much does it cost to auction a house?
- Can I auction my own house and sell it?
- Why get registered with an auction a house and Is it a good idea to auction my house?
- What does the guide price mean via auction?
- How much do auctioneers charge to sell a house?
Alongside this, we’ll also explore the disadvantages of auctioning your home, and give you some auction advice. Keep an eye out for our top tips, too.
Let’s begin with auction fees and the auctioneer commission percentage.
As mentioned auction fees vary and the auctioneer commission percentage is around 2.5%, which may seem like a low number, however, once you’ve footed the bill for the other costs – the last thing you’ll feel like doing is paying an added commission rate.
When you sell a residential or commercial property via auction, you only pay the auctioneer commission percentage if your property is successfully sold, this sounds like a fair deal at first, until you realise if you’re property doesn’t sell – you’ve just wasted lots of time, effort and money on marketing fees and legal fees.
When exploring auction fees, the seller needs to know that auctioneers commission rates don’t usually include VAT – which means even more of your money is being poured down the drain when you’ve not been offered a sale.
Another cost to consider when looking at auction fees involves the legal fees and legal pack for using a solicitor throughout the auction process.
Many people don’t take legal fees into account when they commit to selling a house via auction and this often leaves them feeling stung before they’ve even made it to the day of the auction. When we interviewed an Auction House, they told us about types of properties that are ideal.
If, after reading this, you’ve realised that the fees will be far too high for you to sell via auction and that an auction sale may not be suitable for you, you should give us a call. At Property Saviour, if you sell your property with us, we’ll pay £1,000 towards your legal fees. Fill in our enquiry form to have a chat with us about how we can help you.
Remember Auction fees – how much are legal fees?
Before an auction sale, the solicitor will need to prepare a legal pack, which potential buyers will review prior to bidding at auction.
Remember all the upfront auction fees with no result’s guarantee!
The fees for legal packs can differ depending on the solicitor, but they generally cost around £500 to produce. There’s lots of information in this online guide about the high fees you are charged before the hammer even hits. This isn’t suitable for those who don’t want to fork out money before a guaranteed of result.
Selling a property at auction – entry fees. When considering selling a property via auction, you need to be aware that you’ll have to pay an entry fee the day you agree to go ahead. This fee is used to market the property and can cost the seller up to £3,000. That means you’ve just paid the auctioneer without any guarantee of a sale price. Is that a risk you can justify taking, and is this really suitable for your situation?
Guide price and the reserve price
When selling a property via auction, many people are left confused about guide prices, reserve prices and selling prices – so here’s the low-down.
Each auction property in the catalogue has a guide price and is also subject to a reserve price – the guide price is the level where the bidding will commence. A guide price can be a range of prices such as £190,000 to £200,000. Within this range, the reserve price must be within the aforementioned range. Usually, the reserve price is at the higher end of the guide price.
The reserve price is the seller’s minimum acceptable price at auction and the figure below which the auctioneer cannot sell. The reserve price, which may be up to 10% higher than the guide price, is not disclosed and remains confidential between the seller and the auctioneer.
You must be aware that both the guide price and the reserve price can be subject to change up to and including the day of auction – this is one of the disadvantages of the auction – as nothing is set in stone and there are no guarantees. Even a low reserve price is no sure-fire way of achieving a quick sale. Lower reserve price does increase the odds of being able to sell a property.
Another disadvantage of an auction is that the buyer does not have to go through with the sale, even after the hammer falls. There is no guarantee they won’t change their mind and back out after the winning bid.
If they do back out, it is sometimes because of the house auction fees for buyers that the auctioneer doesn’t make clear to them before the auction takes place.
Remember: The auctioneer always gets paid first once a sale is agreed! The seller is last to be paid.
Buying a house at auction fees
It’s not just the selling at auction fees that are high, the house auction fees for buyers are also high. Let’s take a look at the fees involved.
If you buy a property at auction, you’ll have to pay an administration fee to the auction house, which is typically between £200 and £300 but can be higher depending on the auction house. Buyers also have to pay your solicitor or conveyancer which can range from £1,00 to £2,000. Not to mention stamp duty and a long list of extra completion fees.
Buyers will have to pay stamp duty, too, which can be high. This is also a time-consuming process, and we all know time is valuable when selling a property. Let’s look in more detail.
When buying a property, there are several rate bands for Stamp Duty. The tax is calculated on the part of the property purchase price falling within a variety of different land tax bands. For example, if you buy a house for £275,000, the Stamp Duty Land Tax will be £3,750, which when added to the other fees, might make the buyer think twice about going ahead.
On completion, when signing the property contract, the buyer will also be responsible for ensuring the property, which is another auction fee they probably haven’t considered.
Auctioneers fees, what is fair?
To make matters worse, if the buyer does back out after realising the price it’s going to cost them to buy the property on completion -sellers may also face penalty property auction fees if they fail to complete after exchange.
If you want a guaranteed sale at a low cost and a great price, take a look at our top tips below to find out what we could offer you.
You do not know if you will sell the property in the auction.
Are there any benefits to becoming registered with an auction house?
As you search through our guide, you’re probably wondering if the process of selling your property at auction is a price worth paying, because after all, the price is high and you probably don’t have previous experience.
A low minimum reserve price will be required in order to guarantee a sale for your estate, as if the reserve price is too high, you won’t attract any buyers who’ll consider bidding for a purchase.
However, auctions can have their benefits, if you can attract the right bidders, and have a show-stopping property that you’re willing to risk a lower price for. As the days go by, many sellers get anxious, and that’s to be expected if you do decide to use an auction house, especially as the day of bidding draws closer and there’s no guarantee of potential bidders attending or any of them placing a bid.
Auctioneers won’t chat you through the process at this stage, and you could often end up feeling very alone. Auction houses will feature your property in their registered guides, but no other local or national marketing will take place, and you won’t see your property advertised in any other property guides either online or in print.
Top tips: Attracting local interest is tough, and many sellers speak to people in the local neighbourhood as a way to boost the number of bidders, or advertise in local shop windows, however, it’s not always local people who are interested, and who’s to say they’ll be interested in your property.
How we can help you sell the house at auction?
Answering your question ‘can I sell a house at auction?’ our expert advice would be, yes, you can, however when asking ‘should I sell my house at auction?’ we’d say weigh up your options first, especially if you’re in search of a quick sale. Do your research, and check our more of our online guides.
Property Saviour can make you a guaranteed offer on your property, and we guarantee a fair price for your house.
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 you can expect the process to be complete the process within five to 10 days.
Property Saviour can exchange contracts quickly without waiting months for the next auction, with no upfront costs or auctioneer’s fees to pay upon completion. We will also pay up to £1,000 towards the costs of your legal fees too.
Exchange the selling at auction fees for a quick, no-cost sale with us.
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 and what you can expect if you’re considering an auction sale.
Why not call us for advice on the services we provide 0113 320 6700.