2nd April 2024

Debunking the Myth: Does it cost more to sell at auction?

In the everlasting auction versus estate agent debate, there’s one common misconception that we regularly see, and that is that it costs more to sell by auction than it does on the open market. For inexperienced sellers unsure of which route to take to sell their property, it can be incredibly confusing to be met with contrasting statements on this topic. That’s why our myth busters at SDL Property Auctions are here to shed some light on the situation and prove once and for all that it does NOT cost more to sell your property by auction.

So, if you’re feeling befuddled and turned around, let us bring a little clarity to your selling journey by laying out the facts. In this blog, we’ll tackle the two biggest contributors to this misunderstanding; the thought that auction fees are higher than the commissions taken by estate agents, and the unfounded suggestion that auctions achieve a lower sale price than properties sold on the open market. 

Does it cost more to sell at auction?

First and foremost, it’s important to know that no, it doesn’t cost more to sell your property by auction than through an estate agent. While there is a difference in how most auctioneers and agents take their commission, and some will charge more than others depending on the services offered and their standard fees, usually these routes end up costing around the same amount for the seller. 

At SDL Property Auctions, we offer a few different approaches to auction seller fees to ensure that sellers find an option that suits them, their situation and their property. This includes our ‘no sale, no fee’ option, which means that in the rare case that your property doesn’t sell at auction, you won’t be charged a fee. If you choose to sell with our team of auctioneers, your valuer will discuss all of the selling routes we have available to find an option which is tailored to your needs.

What fees does a seller pay at auction?

When selling by auction, if you’ve opted for the ‘no sale, no fee’ selling route, you can expect to be charged a commission fee upon the successful completion of the sale. This is also true of an estate agent sale, so you don’t need to be concerned about missing out on your earnings when choosing one route over another. There are, however, some additional fees to be aware of:

• Auction legal packs must be compiled prior to a property being sold by auction. These contain all of the vital information about the property, including an Energy Performance Certificate (EPC), title documentation and mention of any special conditions of the sale. Sellers must instruct their solicitor to compile this pack, or our team can arrange this (with prices starting from £390 inc VAT.). 
• Search fees and conveyancing surveys are NOT a requirement for auction sellers to arrange unless they are selling a property in Scotland (where this is a requirement regardless of whether it’s sold via auction or on the open market). However, organising this and including it in the legal pack can attract more buyers and increase bidding confidence, so the fees could pay for themselves if the sale price for the lot is driven up as a result.

Is it cheaper to sell a house at auction?

While auction legal packs can constitute a larger initial investment when selling by auction than at an estate agent (though it’s important to remember that solicitor fees are accumulated regardless of selling route), there are some monetary advantages which can make auction selling the cheaper option. These are created by the faster sales typically secured by auction, which allows for saving on the expenses associated with owning a property, as well as the additional security that an auction sale represents, which removes the risk of sales falling through or offers being discounted after being accepted. 

Faster sales mean lower costs

When people sell their home on the open market they can expect the whole process, from listing to exchange of contracts, to take around 25 weeks. This is, according to Zoopla’s research, the average length of time it takes to sell. Rightmove’s latest House Price Index (March 2024) breaks this down further, claiming that the average time a property takes to find a buyer in the current market is 71 days, which is the longest this has been for this time of year in 5 years. After this, there’s the prolonged organisational period during which mortgages are applied for and surveys are performed to contend with, which usually takes between 12 – 16 weeks. In all of this time, sellers will have property bills piling up, with every delay, negotiation or dropped-out buyer increasing the costs required to keep the house running. 

By contrast, auction sales are praised for their swift selling process. Rather than estate agents’ average of 25 weeks, auctions can lead to a legally binding sale within just 6 weeks. This example includes a short evaluation and marketing period of 2 weeks (though typically we’d recommend this period last a minimum of 4 weeks), in which our team works hard to create the listing and share it with potential buyers through varying media sources to generate interest. Once a bid has been secured, the normal completion period for an unconditional sale is then only 30 days. 

Depending on your circumstances and the property in question, your valuer may recommend a longer marketing period or a conditional sale (which usually takes 60 days to complete). Still, the fast-tracked sale option is available for sellers looking to make a quick sale and save on bills. At SDL Property Auctions, we take a tailored approach to every sale and will help you achieve the best possible price, in a time period that suits your needs.

Secure sales mean no delays

Another benefit which has good potential to turn into cost savings is the enhanced security of auction sales. This gives sellers a strong layer of protection against buyers lowering their offer following surveys further down the line of an estate agent sale, or dropping out altogether at the last minute. This issue in particular can leave sellers with higher solicitors fees and property bills to pay, and the property will need to be returned to the open market to begin the buyer attraction process again. This can also spawn additional issues, as potential buyers may hesitate to make offers if they’ve seen a property return to the market, and when a property spends lengthy periods on the market it can cause its value to lower.

While properties sold on the open market are subject to these risks by nature (except in Scotland, where some additional security is afforded to the seller), the secure nature of auctions means that buyers face considerable penalties should they not complete the sale after making a bid. These protections mean that less than 1% of sales fall through at our auctions and, for sellers who make up this >1%, compensation is paid. 

Do houses sell cheaper at auction?

No, properties do not sell for less at auction than those sold through an estate agent. This misconception has been born from the popularity of auctions for selling renovation properties, which naturally sell for less than a lot with a similar market value in move-in condition. However, by current market trends, auctions may actually help you achieve a higher price than you would when selling through an estate agent. This is because, according to Zoopla, discounts to asking prices are at a 5-year high, with buyers offering an average of 5.5% (or £18,000) under the asking price in the UK, with London and the South East seeing even more substantial undercuts of 6.1% (or £25,000). 1 in 4 agreed sales even saw discounts of more than 10% off the asking price of the property, leaving sellers unconvinced that they’re really getting the full worth of their property when selling by this method. 

This difference in final sale price between auctions and estate agent sales is the result of a wide range of factors, but two of the most important ones include the marketing tactics used, and the buyer audiences. 

Marketing tactics

The most substantial difference between the marketing tactics of estate agents and auctioneers is the price at which they are advertised. In an auction sale, a guide price is set before the auction which must be within 10% of the reserve price on the lot. Guide prices are set to generate strong initial buyer interest, and the price is driven higher through competitive bidding. Estate agents take a different approach, with properties listed in line with their expected value, and if no interest is generated this advertised price is lowered incrementally until a buyer is found. 

From a marketing perspective, it’s imperative to begin with an attractive price from the initial listing, rather than retroactively lowering the price. This is because the former encourages competition, which can increase the sale price, while the latter increases buyer confidence that they can make a discounted offer. According to Zoopla, there are still an ‘above average’ number of sellers who are being forced to reduce their asking price, with properties in the South East and East of England in particular seeing asking price reductions of 5% or more. 

Buyer audiences

Another considerable benefit which has strong potential to boost the sale price of your property by auction is the wider range of buyers that are attracted to this purchase method. At SDL Property Auctions, we see everyone from investors and developers to landlords and residential home-buyers at our auctions, helping to give properties a broader potential market. Additionally, as all of our auctions are accessible online, regardless of whether a lot is listed under one of our live streamed Auction Events or in our online Timed or Buy it Now auctions, bidders don’t face any geographical boundaries and can join in from anywhere in the world.

The wider range of buyers we see also means that, for properties which do need a little more work, whether that’s a full renovation or some surface-level refurbishment, sellers may see more competitive interest than they would on the primarily residential buyership of an estate agent sale. Auction buyers tend to have a keen eye for a project, after all, and will be willing to pay to get their hands on a good one.

Achieve the best price possible for your property by selling by auction

At SDL Property Auctions, our teams do all they can to ensure sellers get the most possible from our auction marketing methods and broad audience base. Our selling approach is completely tailored to the individual needs of every seller and their property, and we advertise our properties both regionally and nationally through a range of channels including our website, popular external listing sites like Rightmove, and even in the local press and on social media. 

If you’re interested in reaping all the benefits of selling a property at auction, start the process today by requesting a free, no obligation sales valuation. Alternatively, if you have more questions, reach out to our team by using our live chat function, emailing us at enquiries@sdlauctions.co.uk, or giving us a call on 0800 046 5454.