Using an auction house is, understandably, not most people’s first thought when it comes to selling their home. It certainly isn’t the best route in the majority of cases.
But, under the right circumstances and for certain types of property, it’s definitely worth considering.
We shed some light on selling your home at auction.
Selling a house at auction – pros and cons
There are both advantages and disadvantages to property auctions. It can depend entirely on the individual circumstance and situation!
Firstly, its quick. Once the hammer falls the buyer is legally committed to buying your home and it’s a speedy, uncomplicated process.
Secondly, with house auctions, the deal is certain. The highest bidder is committed to buying your house, so you don’t have to worry about them changing their mind. Contracts are exchanged, and deposit monies paid immediately.
Also, there’s no chain. The highest bidder will have a timeframe within which to complete the purchase, so you don’t have to worry about a chain scenario and the problems that can bring.
There’s usually competitive interest. You will hope to have more than one bidder interested in your home and multiple bids is only ever a good thing as it can help increase your price.
Auctions are good for unusual properties. Many property auctions are dilapidated or unusual in some way. People come to property auctions looking for good value, and so properties that need work, or are not ‘normal’, often sell more easily in this environment.
Despite these positives, there are some inevitable downsides to home auctions.
They can be expensive. Auction houses charge in the region of 2.5% on the hammer price achieved, which is more than most high street agents.
Also, they’re binding. Once the hammer falls the buyer can’t back out – but neither can you. Be certain it’s what you want before you commit to sell.
Lastly, it’s important to remember that you don’t always get the best price. Auctions offer rich pickings for bargain hunters. You shouldn’t use an auction if you’re intent on getting top dollar for your property.
How to sell your property at auction
If you are going to sell your house at auction, here’s some advice on how it’s done:
Choosing an auction house
Don’t be driven purely by price. Sometimes, the auction house with the higher fees may be better known and have better attended auctions. Therefore, this can get you a better sale price.
However, a smaller auction house may be more flexible in their terms and have better fees.
Speak to a variety i.e. local operatives and larger companies. Ask three or more to visit the property and value it for you so that you have multiple opinions as to what to set the guide/ reserve price at.
Make sure you quiz whoever you speak to to ensure there will be plenty of people attending the auction your property is to be listed in.
Look at an auction house’s upcoming auction and check that they are used to or known for selling properties like yours.
Decide on the reserve price
The reserve price is the lowest price you would be willing to accept for your property. Be realistic about this price and make sure you would have no regrets if it is the value you manage to achieve at auction.
It’s likely to be 70-80% of the true market value of the property and accepting that this may be what the property sells for is the true test of whether selling at auction is for you!
As with all methods of property sale, don’t always pick the highest valuation or the lowest fee. Take a balanced view of the feedback you get and pick the auction house who are likely to get the most buyers in the room on the day.
Deciding on the guide price
Your chosen auctioneer will help you set the guide price on their property. So, it’s very important to do your research and make sure you pick someone who has recent and relevant experience with properties that are similar to yours.
Auctions tend to be quick and cheap, so don’t insist on the same value a high street agent gave you. A house for auction is there to sell in a matter of minutes and buyers tend to be landlords or bargain hunters with a specific amount of cash in their pockets.
The aim of an auction is a guaranteed sale and not necessarily at top dollar.
Prepare your home
A property for sale at auction needs to look its best.
Many auction properties are small and often look pretty unloved. It isn’t hard to set your home apart by ensuring it’s clean and well presented.
While you may not have too much input into what the auction house puts in their marketing material, try your best to ensure that any photos are light and bright and show the space at its best.
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