An option that is available, but often overlooked by home sellers is a property auction. It’s a process often vaguely, but not fully understood by sellers meaning it can be can hard to know the advantages and disadvantages of selling this way.
On the surface, it may seem like a quick and hassle-free way to sell your home. While it does certainly offer a quick solution, the process can be more complicated than most would think.
In this article, we look at the process involved in selling a property at auction as well as the benefits and drawbacks, to help you decide whether it’s an option that would suit you.
How does a property auction work?
A property auction involves selling a property by offering it for bidding. Bids are taken from prospective buyers and the property sold to the highest bidder. A reserve price (starting price) will be set, and each subsequent bid must be higher than the one before. When the highest bid is accepted and the hammer strikes, the property becomes ‘under offer’. The winning bidder pays a deposit of 10% of their offer to secure the sale and pays the rest to complete the sale after the conveyancing process is complete.
If you decide to sell your home at auction, you will need to find a suitable auction at which to sell. It is worth searching online for nearby auctions, or alternatively, there are online-based property auctions. You should look for one that deals with your type of property so you know the prospective buyers will be interested.
Once you have chosen an auction, your property will be subject to an appraisal by an auction valuer who will value the property and advise you on the process and your reserve price.
You will then need to agree to any terms and conditions and provide all the personal information and legal documentation required to sell.
You will need to appoint a solicitor to handle the legal side of the sale and ensure that you are able to successfully hand over the property to the highest bidder.
The auction will proceed to market your property, writing a description, taking photos and publishing these online and on auction boards.
Once you have decided on a sensible reserve price, potential buyers will register for auction. They will usually be checked for identification and undergo legal searches to prevent fraud and money laundering, as well as being verified that they will be able to pay what they bid.
After the highest bid has been accepted, the conveyancing process will take place, which can take approximately a month or so. This sees the legal transfer of the property from seller to buyer with the process being finalised once all the money has been transferred and keys handed over.
The process normally takes roughly two months.
Advantages of selling at auction
Selling at auction provides a quick alternative to selling the traditional way through an estate agent.
Additionally, auctions involve chain-free buyers who must prove that they have the funds available. A chain collapsing is one of the top causes of fall throughs so at an auction it much more likely that the conveyancing stage will complete without too many hitches.
There is also the benefit of increased buyer interest. When your property goes up for auction, it may attract a number of keen buyers who will get into a bidding war and drive the price up.
Disadvantages of selling at auction
Unfortunately, the price you’ll get for your property is not guaranteed and while there is the chance that the price could get driven up, it is also possible that your property will receive little interest and sell for less than market value. In the worst possible instance, nobody will bid on your property and it will take a lot longer to sell, if not at all.
You’ll also still have to pay solicitor fees and an auction house fee. The auction will often charge you around £300-£400 to enter and then approximately 2.5% of the sale fee. There are multiple quick sale alternatives out there, such as webuyanyhouse.co.uk which guarantee you a sale in as little as 3 days and won’t charge you a penny in estate agent or solicitor fees.
There is also the fact that all sales are final. Once the hammer strikes, that is how much your home will sell for, regardless of whether you’re happy about the price or not.
Selling at auction will ultimately not be for everyone. If you are not in any rush, this is not the best route for you as you are not guaranteed a good price. If you are looking to sell quickly and you are confident your property will be popular amongst the prospective buyers, this could be an attractive alternative. The major downside is the uncertainty; your home may receive little interest and you may have to accept an offer you’re not happy with, so selling via an auction should be carefully weighed up.
This article was written by a quick house sale company We Buy Any Home. If you’re wondering “how can sell my house fast”, head to the We Buy Any House website for more information relating to all property related enquiries.