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Using property auctions to sell your house quickly

Property auctions are exciting! Whether you're a buyer or seller they definitely have an "edge of the seat" quality to them.

As a vendor auctions give you the opportunity to reach a whole new set of potential house buyers.

Read on to find out how to sell your house at a property auction. Or, if you're in a hurry read our Six Top Tips for selling property at auction

Property auctions can give you a quick sale

Today private sellers like you, are choosing to sell through the sale room.

Why? Well two reasons. There is a clear timetable for the sale – 28 days or less. Great if you're looking to sell your house quick.

Also, in today’s market, if the marketing is done right, you get a good price. This partly explains the increasing number of properties being sold through the sale room - at ever higher prices.

The average price of an auction lot rose a whopping 30% during 2006. What's more these days around 50% of the people attending residential auctions are private buyers. The two statistics are almost certainly linked.

Here you will find out exactly how to sell your house at auction:

√ A quick history of property auctions
√ Which properties sell well and why
√ Why you can achieve a good price in the sale room
√ How to use auctions to sell your house quick
√ The advantages of selling through property auctions
√ The risks of selling at auction
√ How to manage the risks
√ How to choose an auction
√ How property auctions work
√ How to make people bid on your house
√ The main things to consider when selling property at auction

The main question to consider is whether a property auction is the right place to sell your property. But before we consider that it's important to have some background on property types and who has been buying at auctions. The house auction scene has changed quite dramatically in recent years.

The advantages of selling at a property auction

You get a commitment to buy. The contract of sale comes into force as soon as the gavel falls.
It's Quick
The timeframe is usually much shorter than for properties sold via estate agents. Ideal then if you want to sell your house quick.
The format lets bidders drive up prices. Competitive bidding at a house auction for some types of property can achieve close to open market or better prices.

You won't be messed around by buyers (or at least the possibility is extremely remote). There's no room for re-negotiation or gazumping.

All this assumes a reasonable reserve and guide price. But more about that later.

The risks of selling at a house auction

The main risks associated with selling your house at a property auction can be summarised as:

  • your property may not sell
  • your buyer may fail to meet the completion date
  • you may still incur costs if your property sells before the auction

    Should you sell your house at auction?

    Any auctioneer will be happy to discuss the pros and cons of selling your house at auction. The auctioneer will take your particular circumstances into consideration.

    In fact, to get legal for a moment, auctioneers (and estate agents) are both bound by a ‘Duty of Care’. As a potential vendor, they are obliged to advise you on the best method of selling your property, taking into account the circumstances under which you are selling. This should be part of your discussion with the auctioneer when your property is appraised by the auction house. Other methods of sale the auctioneer might advise are via estate agents (‘By Private Treaty’) or by tender.

    How property auctions actually work

    The mechanics of selling your house at auction are actually very simple:

  • you pay entry fees and sale fees
  • you set the minimum price (reserve price)
  • bids are made in an open, competitive environment so the sale price achieved is public knowledge but..
  • you can’t choose the buyer
  • the highest bid wins as long as it meets or exceeds the reserve
  • bidders can make as many bids as they want to
  • your prepare the legal pack with your solictor
  • the contract to buy and sell is made as soon as the gavel falls
  • the whole process takes a maximum of 28 days – ideal if you want a quick sale

    On the money side of things fees are generally of two kinds: entry fees and sale fees.

    Entry fees are non-refundable. As a rule of thumb they cover the advertising of the sale. These can run to several thousand for the top London auction houses.

    The sale fee is a commission based charge and is typically between 1.5% and 3.0% of the final selling price.

    It is not necessarily in your interest to choose the auctioneer with the lowest fees. You should be asking yourself is the auction house “fit for purpose”?

    Another consideration might be the way the auction house sets reserve and guide prices. This is one aspect of selling houses at auction that is not as simple as it should be.

    TipYou’ll get the best price for your property at auction, selling either at an established local auction or a big London auction. These will attract the highest offers. All things being equal avoid selling in July and August at auction if you can.

    Use our online facility to help with finding property auctions.

    Which property auctioneer should you select?

    Once you have shortlisted a small number of property auctions you need to select the right auctioneer to sell your property quickly. Use our ten point auction checklist to help you make the right choice.

    Selling property at auction - the legal side

    The contract you have with the auction house outlines your obligations as the vendor. It is referred to as the “Terms of Agency”.

    It is a legal document so should be read carefully. Details will include:

  • providing proof you have the authority to offer the property for sale
  • giving binding authority to the auctioneer to negotiate and enter into a contract
  • commitment to pay the fees associated with the sale
  • confirming the reserve price no later than three days before the auction
  • instructing your solicitor to compile the legal pack for the property in good time

    Managing viewings

    Viewings are typically conducted on a block basis which has the advantage of making the viewing process competitive. As you are selling your own home, you may decide to conduct the viewings yourself. If your house is empty then viewings will be undertaken by the auctioneer’s staff.

    A number of buyers are suspicious of properties with existing tenants, so some vendors elect to put their tenants on notice so that the property is empty ahead of the auction. Of course there are disadvantages of this strategy too.

    If your property has tenants then try to come to some arrangement with them about making the property accessible for viewings. If there is no access for viewings the chances of selling your property are sharply reduced.

    Seek advice from the auctioneer about the best course of action for your house.

    Handling pre-auction offers

    Auction buyers can make offers on properties before the actual date of the auction.

    Some types of sellers are unlikely to accept such offers but private sellers generally do not come into this category.

    Any offers worth considering should be passed to you by the auctioneer. If offers are made at or around the guide price the auctioneer may advise waiting for the auction itself – as this indicates competitive bidding to come.

    It is up to you whether you wait or accept a pre-auction offer. If you really need to sell your house quickly then you may well decide to accept a pre-auction offer if it meets your needs.

    What happens after the auction

    Once the buyer has signed the memorandum of sale the buyer is given the legal pack and a copy of the memorandum. In some cases the paperwork will be sent directly to the buyer’s solicitor.

    From there things should be pretty plain sailing. The buyer will be required to pay the outstanding balance in advance of the completion date usually 20 days after the sale (28 days in total).

    Note that the auction route can be used as an adjunct to selling a property through an estate agent. And indeed, many properties auctioned are actually on an agent’s books (sometimes a related agent) before the auction.

    The auctioneer’s contract stipulates that the auctioneer is appointed sole agent. If the property sells to a buyer introduced by another agent you still have to pay the auctioneer’s commission.

    This means if your property was originally on the market with another agency read the term’s very carefully – you could find yourself liable for two sets of fees! Property auctions are expensive enough without the misery of incurring two sets of fees.

    However, the speed and certainty of property auctions suits the circumstances of some house sellers. If your're unconvinced this is the way you want to sell your property, you may be interested in the alternatives.

    Return from Property Auctions to Tips and Guides

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