Are you auctioning your property?
Are you prepared to put in a low guide price, wait two months, and pay upfront fees with no guarantee of a sale?
How about if you can sell your property as it is anywhere in England or Wales with a guaranteed cash offer?
Selling your house at auction might seem like the best way to get a quick sale, especially if the property has troublesome issues like subsidence, dry rot, fire damage or flooding. However, for inexperienced property owners, it can be a stressful process with an uncertain outcome.
If you have seen BBC’s Home Under The Hammer TV program, you will be familiar with the process for auctions. You may not be aware that to get potential buyers excited, the property needs to have a really low guide price.
The guide price is where the bidding will start at. The reserve price is the price at which you will be legally obliged to sell. Following a ruling by Advertising Standards Agency, the reserve price can’t be more than 10% of the guide price.
A property auctioneer will ‘lot up’ his properties into a catalogue; the first ten lots are usually very popular. They will place ‘lemons’ (these properties that might not sell) next to ‘star lots’ so that bidders who miss out on their preferred property could bid on a ‘lemon’.
Once an auction catalogue is published, it is too late to change the order of auction lots.
If your property is in Yorkshire and is placed with a London auctioneer, it is doubtful that a potential bidder will pay £200 for a return train ticket to bid on a property they might not be able to buy.
Property auctioneers like to deal with repeat customers. Banks, administrators and councils who dispose of properties in auctions regularly. Therefore, they influence where their properties are placed in an auction catalogue of 200 lots.
Your property will be one of these 200 lots, and your custom to auctioneer is a one-off transaction. The result achieved will be more luck than chance. Do you think they will have time or inclination to give your property the best chance when the odds are against you?
Unless you know exactly what you are doing, you could take a huge risk with an auction sale. Auctioning a house isn’t for everyone.
Auctions are painful for the seller and equally painful for the buyer. With the recent rise of the ‘Modern Method of Auctions’, more pain is added by additional fees or ‘buyer’s premium’ hidden within legal packs written in text in small print.
When the buyer is paying the auctioneer’s commission as sellers are told, ‘it is free to sell,’ there’s a strong possibility of conflict of interest. You will lose out as the buyer will bid less for your property or could pull out of the sale – leaving the estate agent and auctioneer to split the fee between them. But that’s not the worst part. If the property is unsold, it is automatically entered into their next auction.
What if you need to sell now and want to avoid the pain and uncertainty?
Navigating the complexity of the auction process, fee structure and trying to get a fair price for your property might feel like a few hurdles too many. Here we discuss the pros and cons of selling a property at auction and our insider tips.
Suppose you’ve inherited a dilapidated house or don’t have time or inclination to learn the ropes of the auction house. In that case, you may find it less stressful to sell to a professional cash buyer like Property Saviour instead.
A guaranteed discreet sale gives you peace of mind and puts you firmly in control of the situation.
Auctions can be an excellent idea if you are looking for a quick sale. This is because the process is far less drawn out when using an estate agent.
As the seller, you have the certainty that once the hammer has gone down, in theory, the highest bidder cannot back out of a sale. However, a sale is still not guaranteed just because you intend to sell via auction.
If you have a suitable property and provided that you are well aware of the pitfalls, it can be a good idea to sell your property in an auction.
Auction properties appeal to property developers due to a short completion date. The contract of sale can state a specific date for completion, and that’s why mortgage lenders can’t lend funds for auction purchases.
Some people are natural-born adrenaline junkies. If you enjoy the excitement and the fear of uncertainty or the challenge of doing it on your own, this may be your route. The typical advantages of house auctions are:
Would it be more comfortable to get a guaranteed price for your property rather than putting it through an auction?
As cash buyers, our offer means that a sale can be completed within 2-3 weeks, and we pay your legal fees. Why not get in touch with us to see how we can help?
Not all types of properties are suitable for auction. Properties in need of refurbishment or a rented property can potentially appeal to property investors IF you can create a very competitive bidding war that can allow for a great chance of the property selling for a higher price.
Property auctions can be expensive, so it’s worth weighing up the options to get the best deal. So, how much does it cost to have an auction? Many auctioneers are shy of telling you this upfront.
There are certainly costs for the seller in selling a house at auction. These include entry fees, commissions, and legal expenses.
You have to put in a very low guide price which is often way less than a property is worth, to attract bidding. If all goes well, your property could be sold within 28 or 58 days after the auction.
One particular thing to consider is to enter the property for auction with a reasonable amount of time for the property to be sufficiently promoted to maximise the chance of a successful sale. Entering the property at least 4 weeks before the auction date is recommended.
If you are looking for a quick sale of your property without the hassle of going to auction, why not ask us to see how we can help you?
If a property does not sell at an auction, the seller can still re-enter the property for future auctions. However, they would still be required to pay entry fees for all auctions they enter, whether the property sells or not. This is where gazundering occurs, and you could end up with silly offers post-auction.
When selling a house at auction vs a discreet sale to Property Saviour, you are taking a chance. There are no guarantees that your property will sell at all. However, Property Saviour does guarantee to buy your property or rental portfolio from you.
Many of our clients found us by searching for “how to sell a house at auction” but after careful consideration, they felt it would be too intense and stressful for them at this juncture. There are several disadvantages related to auctions, as mentioned earlier.
Auctions are not necessarily a quick way to get rid of your property. The process can drag on for months with two or three months between auctions.
Once you sell your property via auction, you will only get 10% of the sale price as a first payment minus the auctioneer’s commission.
You will usually have to wait a month for the rest of the funds. If a 28-day wait for your money seems long, why not sell your house fast for cash?
With a discreet sale to Property Saviour, the cash will be in your account in under a fortnight. Which would you prefer – 14 or 28 days?
As auctions have a strict timescale for the completion and handover of the property, you may be forced to move out before you’re ready.
You’ll need to consider your job requirements, children’s schooling, arranging transportation, removals and utilities.
If you sell to Property Saviour, we’re more human and realistic. We’ll get your sale dealt with quickly and your money in the bank – but you won’t be kicked out before you’re ready. We’ll give you a rent-free period to allow you time to plan your move.
In “Modern Method of Auction”, sellers are told there are no auction fees when, in fact, they are charging the buyer an eye-watering up to £9,600, including VAT which is called “buyers premium”.
The auctioneer and referring estate agent split this fee between them.
Naturally, any sensible buyer will pay £9,600 less to you as they consider their maximum bid price.
Again, if the buyer can’t complete, the auctioneer gets paid, not you. The £9,600 fee is theirs to keep no matter what happens.
Property Saviour will buy your property when you don’t feel you have the time, patience or knowledge to sell your home at auction.
Whatever condition your property is in – structurally unsound, completely trashed or just needing updating everything. Our team of experts will be able to make you a cash offer today.
Only Property Saviour can guarantee to buy your home, complete the paperwork within a couple of weeks, and pay the legal fees. You won’t have to market your home, and you won’t have to worry about anything. You won’t get this from an auction house.
The main reason people usually give for selling a house at auction vs a discreet private sale is that they think selling a property at auction will give them a better price. But this is not always true.
Some properties may not be right for an auction – whereas Property Saviour will buy your house whatever the circumstances. Forget lengthy forms, upfront fees and the risk of property not selling at the gravel. We will also buy commercial property too!
Why not simply telephone us for a chat about your current situation? It won’t cost anything and is a great opportunity to find out where you stand! You can also visit our blog for step-by-step property guides and the latest property news.
How do house auctions work? Interested buyer submit their bids and the highest bidder wins.
The winning buyer will have to pay a deposit or a reservation fee.
There is no guarantee that your property will sell at auction even with an enticing low guide price. It is estimated that around 1 in 5 properties fail to sell. You will have to pay upfront costs such as entry fees and preparing a legal pack. Unsold properties in auctions can be very difficult to sell due to stigma.
Property auctioneers charge upfront fees, you have to pay for a legal pack and the buyer will have to pay fees too. These fees are split with anyone who introduces auctioneer to a seller such as an Estate Agent. This explains why the fees are so high.
Property auctions attract investors because they can buy cheap property at 20% or less than its market value. If there’s a strong bidding war, a property could sell for more than its market value, and that’s the risk.
Not all types of properties are suitable for auction. With a low guide price, if there are few bids, you could end up losing a lot of money. Why take the risk?
Property auctioneer can charge up to 2.5% of final sale price plus VAT. On top of that, you may have to pay an entry fee of around £500 that is non-refundable and spend money on searches and preparing a legal pack. With no certainty of success in auction.
With the modern method of auction the successful bidder must put down a non-refundable reservation fee. This is not a deposit. This can be as much as £9,600 inclusive of VAT. If you are the seller you could be worst off as the Estate Agent and Property Auctioneer keep that as their commission.
In a property auction, you aren’t in control as a seller because you are letting the market decide what your property is worth. The biggest risk is property being given away at a low reserve price because you were ill-advised by auctioneer.
Pros and cons of selling a property in auction include:
In a property auction, you have to pay for a legal pack, interested parties bid on your property and the highest bidder wins. The successful bidder will put down a deposit or a reservation fee.
There are various steps to selling a property at an auction. The first one is to approach an auction house for an appraisal, where they will assess the value of your property and whether it is suitable for auction.
After this, you will then discuss fees and commissions with the auction house, which is then followed by an inspection of your property, where elements such structural condition and defects will be checked for, as well measurements being taken.
The property will then be promoted by the auction house, to draw sufficient interest. This will be done through various channels which include online and through auction brochures. Auction houses are able to target specific likely buyers for your property type, within their promotion strategy.
Once the property has been promoted, the auction itself will take place where the property will hopefully be sold. The buyers pay 10% at the auction and have a month to pay the remaining 90%.
Most property auctioneer have 7 or 14 day cooling off period to change your mind. If you decide that property auction isn’t for you, you can give them a written notice to withdraw.
A buyer can pull out of auction, he/she will lose their deposit or reservation fee. He/she will be in breach of contract and as seller you can sue them but litigation is very expensive.
A reserve price is the minimum price that is agreed between the seller and auctioneer, that bidding has to reach before a property can be sold at auction.
Bidders are not made aware of this reserve price, because it is confidential between the seller and auctioneer. The seller is not allowed to increase the reserve price once it has been set, however, they can lower it.
A property auctioneer will advise you to put in a low reserve price because lower reserve price increases chances of selling a house. But is it worth giving it away?
A reserve price is the minimum price that a seller would be willing to accept from a buyer in an auction. Seller or auctioneer are not required to disclose the reserve price to potential bidders. If reserve price is not met, the property does not sell.
The reserve price can be up to 10% higher than the guide price. Reserve price remains confidential between the property auctioneer and seller.
A guide price is where the bidding will start. The reserve price can’t be more than 10% of its guide price. Seller risks giving away a property with a low guide price.
A guide price is indicative of property’s value determined by the auctioneer. Bidding starts at guide price. Auctioneers set low guide prices to attract buyers.
Selling a property at auction take between 2-3 months to complete. This is because you have to wait for next auction and then allow for 3 weeks of marketing period. But what if you need to sell now?
Auction is not the quickest when it comes to selling when compared with a professional cash house buyer such as Property Saviour. Auction can take up to 3 months to complete whereas Property Saviour can complete the purchase in 2 weeks or quicker.
At property auctions, the exchange takes place once the winning bid has been accepted and the relevant documents are signed and the 10% deposit is made.
The completion is the agreed date that the ownership passes from the seller to the buyer and the buyer receives the keys and is then entitled to physically move into the property. The buyer will have needed to have paid the full amount by this date.
The secret to auction success is putting in a really low guide price to generate maximum interest, and let the bidders decide what your property is worth. This isn’t for everyone and some sellers prefer to get a guaranteed cash offer with no fees to pay.
You would have to pay £500 or so for auction entry fees, pay £500-£1,000 to your solicitor to prepare a legal pack and then pay auctioneer their commission at 2-3% plus VAT if your property sells.
You need to check if your property is suitable for auction because not all properties are. If you are prepared to put in a low guide price and pay upfront fees then taking a chance with auction could be worth the risk.
You can sell your property for cash either under terms of auction or by selling directly to a cash buyer such as Property Saviour. We will pay your legal fees too.
Property auctions are risky. There is a possibility that your property might do really well or you could end up giving it away. Would certainty of a cash buyer, with no fees to pay, suit your needs?
If your property does not sell at auction, you can approach a professional cash house buyer like Property Saviour who will cover your legal fees and complete within a few days.
Sellers have a variety of reason for considering auction as a way to sell their property. For instance, a property has to be sold because a landlord is retiring or seller must sell within a fixed timeframe. Auctions do not guarantee a sale.