The reserve price is the lowest amount a property can be sold for at auction. This is decided by the auctioneer and approved by the seller before the sale.
When selling a property at auction, the seller sets a minimum price they’re willing to accept. This is the reserve price. The seller only has to sell if the bid meets or exceeds this figure.
The reserve price is kept confidential between the seller, their solicitor and the auctioneer. Buyers will be given an indication of this price in the form of a ‘guide price’. To learn more, read on.
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What is the “Reserve Price”?
The seller, with the help of the auctioneer, sets the reserve price. This is the minimum acceptable bid. If bids lower than the reserve price are placed, they will not be accepted.
The reserve price is kept confidential between the auctioneer and seller, and is not made available to the public. It can be up to 10% higher than the guide price, or lower.
How Do you Find out the Price Sold at Property Auction?
If you’re wondering what an auction property sold for, and how it compares to the initial guide price, you can usually find the answer on the auctioneer’s website. Look for the “Sold Auction Lots” section or check the listings.
How Much Does an Auction House Charge the Seller?
Auction houses typically charge a commission fee of between 1.5 and 2.5% of the final sale amount. Additionally, you may also have to pay advertising charges. It is essential for sellers to find out how much they will have to pay in extra fees before their property heads to auction.
This fee is typically taken out from the buyer’s deposit after the exchange of contracts. The auction house will then pass the remainder to the seller.
How Much Does an Auction House Charge the Buyer?
The buyer needs to pay a 10% deposit to the seller, as well as a “buyer’s premium” directly to the auction house. How much does an auction house charge? It can vary, but typically, it’s a percentage of the sale price, between 2% and 10%, plus VAT.
Why Do Auction Houses Charge a Buyer’s Premium?
This charge is to cover administrative costs and help with the running of the auction house, as well as covering additional expenses. It enables it to keep up its high standards and pay its employees.
In a Modern Method of Auction, the buyer’s premium can be as much as £9,600, whereas in a traditional auction, it can be around 1% of the purchase price! The buyer’s premium can lead to buyer’s remorse if they feel they have overpaid for a property in the heat of the moment, resulting in an abortive sale.
When bidding on a property, a buyer should factor this amount into their budget. Often, information about this can be found on the auction house’s website, but it is also possible to get in touch by phone and ask directly.
It’s worth noting that sometimes, the seller doesn’t have to pay an administrative fee. Instead, this fee may be covered by the premium. Alternatively, there may be a “buyer’s fee,” which is usually a set amount, typically between £195 and £1200.
For this reason, both the buyer and the seller should carefully calculate their budget before committing to a transaction at auction.
How To Avoid Uncertainty of Property Auctions?
If you’re looking to sell your property quickly but don’t want to go through the hassle of an auction, get in touch with Property Saviour.
We can buy your house in as little as seven days and offer you a no-obligation cash offer. Plus, there are no estate agency or solicitor’s fees to worry about.
For more information, don’t hesitate to get in touch with our friendly specialist team today.
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