Yes, auction houses do charge sellers various fees when selling a property at auction. It’s important to be aware of these costs before deciding to go down this route.
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Do Auction Houses Charge the Seller?
These are typical fees sellers are expected to pay:
Commission Fees
Auction houses usually charge a commission based on the final selling price, typically ranging from 2% to 2.5%, plus VAT. This fee is only payable if your property sells, but it can significantly impact your net proceeds.
Entry or Listing Fees
These are upfront fees required to list your property in the auction catalogue and online. They can start at around £300 + VAT, and some auction houses may defer this payment until after a successful sale.
Legal Pack Preparation
You’ll need to prepare a legal pack, which includes all necessary documents for the sale. This can cost anywhere from £200 upwards, depending on the complexity of your property.
Marketing Fees
Additional marketing costs may apply if you want to enhance your property’s exposure to potential buyers. You can take a look at our auction fees calculator to get an estimate of auction fees.
Understanding MMOA and the Buyer's Premium
The Modern Method of Auction (MMoA) is a popular way to sell property, offering a blend of traditional auction methods with more flexibility for both buyers and sellers. One key aspect of this method is the buyer’s premium, which can significantly impact the sale.
What is a Buyer's Premium?
A buyer’s premium is an additional fee paid by the winning bidder on top of the hammer price of the property. This fee is typically a percentage of the sale price or a fixed amount, and it is intended to cover the auction house’s administrative costs. For instance, some auction houses charge a buyer’s premium of 3% to 10% of the final sale price.
Things Sellers Should Keep in Mind
While the buyer’s premium can help reduce some costs for you as a seller, here are a few things to think about:
- Know the Fees: Make sure you fully understand how the auction house’s fees work, including the buyer’s premium. This will help you avoid any surprises and plan your finances better.
- Impact on Buyers: Remember, a high buyer’s premium might put off some potential buyers, especially those who are budget-conscious. This could mean fewer bids and might affect how much your property sells for.
How Does the Buyer's Premium Affect Sellers?
For sellers, the buyer’s premium can have several implications:
- Lower Upfront Costs: In the Modern Method of Auction, sellers often face lower upfront costs because the buyer’s premium helps cover the auction house’s expenses. This can be advantageous for sellers who want to minimise their initial outlay.
- Potential Impact on Final Sale Price: Since buyers factor the premium into their bidding, it can affect how much they are willing to pay for the property. This could potentially lower the hammer price, as buyers adjust their bids to account for the additional cost.
- Reduced Seller Commission: Some auction houses might offer reduced seller commissions because the buyer’s premium helps offset their costs. This can be beneficial for sellers looking to maximise their net proceeds.
Why auctions can give you a headache?
Exclusivity Contracts: Auction houses often require you to sign an exclusivity contract, which ties you to them for a certain period. This means you can’t explore other selling options during this time, which can be restrictive.
Re-listing in Future Auctions: If your property doesn’t sell the first time, it might automatically be entered into the next auction. This can mean additional fees and the possibility of having to lower your reserve price to attract buyers.
Why Consider Selling to Property Saviour Instead?
If you’re looking for a more straightforward and cost-effective way to sell your property, Property Saviour might be the solution:
- No Fees: We don’t charge any commission or entry fees, and we’ll even contribute £1,500 towards your legal costs, saving you money from the outset.
- Quick Sale: We can complete the purchase within 10 days, offering a much faster turnaround than the typical auction process.
- Guaranteed Offer: Our offers are firm and won’t change, eliminating the uncertainty and stress of auction sales.
Property Saviour Price Promise
- The price we’ll offer is the price that you will receive with no hidden deductions.
- Be careful with ‘cash buyers’ who require a valuation needed for a mortgage or bridging loan.
- These valuations or surveys result in delays and price reductions later on.
- We are cash buyers. There are no surveys.
- We always provide proof of funds with every formal offer issued.
We'll Pay £1,500 Towards Your Legal Fees
- No long exclusivity agreement to sign because we are the buyers.
- You are welcome to use your own solicitor.
- If you don’t have one, we can ask our solicitors for recommendations.
- We share our solicitor’s details and issue a Memorandum of Sale.
Sell With Certainty & Speed
- Our approach is transparent and ethical, which is why sellers trust us.
- 100% Discretion guaranteed.
- If you have another buyer, you can put us in a contracts race to see who completes first.
- Complete in 10 days or at a timescale that works for you. You are in control.
