3rd August 2020
How to sell your property by auction
There are several reasons you may wish to sell your property by auction. Whether you’re looking for a quick sale, a transparent process, genuine buyers with a secure means of sale – the list goes on and you’ll find it all when you sell your home with an auctioneer. However, it’s a common myth that selling a property by auction will see you achieve less than its value, and this can often put people off. This isn’t the case, as you are able to set a reserve price, meaning your home will not be sold for a penny less than what you would be happy to receive for it. There is even potential to achieve more than its valuation, as if enough interest is generated and if a bidding war begins, you may see it go far beyond this.
In this guide, we’ll provide all the information you need about selling your house at auction, to help you begin the process.
Does it cost to sell at auction?
Firstly, you’ll of course want to know whether there are any fees involved with selling your home by auction. The answer is possibly no. There are a number of options when selling by auction which can include the seller paying no fees at all and instead the buyer pays an additional buyers fee. This is often an attractive option when you are selling due to a death or a divorce and you have no cash prior to the auction to fund the sale. Many buyers are happy to pay a buyers fee however they are likely to factor this cost into their ceiling bid price. Alternatively as a seller you can pay an initial fee and commission price for the sale of the property, meaning the buyer doesn’t have to pay anything extra, maximising the final sale price of the property.
Regardless of which auction route is selected, there are solicitor fees to prepare the legal pack for your property, which typically costs around £350 to £500. After your home is sold, you will also need to instruct a solicitor for the conveyancing of the property, which can cost anywhere from £450 to £750.
Get an appraisal
Before you can list your property for auction, you will first need to arrange for your chosen auctioneer to carry out an appraisal on your property. During this consultation process, the auctioneer will advise whether your property is suitable for auction, as well as providing you with an accurate valuation. Knowing what your property is worth will also help you to set an appropriate guide and reserve price.
Set a reserve price
Once you’ve received your formal valuation of the property, then you will agree a suitable reserve price with your auctioneer. The reserve price is the lowest price you will accept for your property. An auctioneer will not sway you to lower this beyond what you are happy to, but it is important to note that your property may not sell if you set the reserve price too high, because if bids do not reach this, your lot will be withdrawn from the auction. If this does happen, then your property will be marked as unsold, however bidders will still be able to make you an offer after the auction.
Set a guide price
The guide price is the price at which your property is marketed to potential bidders. This is something that your auctioneer will again help you with, to ensure it’s fair and will generate interest. The guide price must be within 10% of your agreed reserve price. Setting an attractive guide price may work in your favour to encourage bids and to drive up the ultimate sale price beyond what you had hoped.
When you sell your property by auction, you get the added benefit of extensive marketing of your property. Once you have signed off your property details, then it will be added to the auctioneers website and its auction catalogue, as well as advertised on property portals for potential buyers to browse. This will include a description of your property, as well as professionally taken photographs. Your property may also be shared on social media and in local press. This helps to generate interest and encourage buyers to place a bid. It’s important to bear in mind that potential buyers may still wish to visit your property and have their own survey carried out.
On the day of auction
You may be selling your property at a physical auction event, which will currently be broadcast via live stream due to the restrictions in place at the time of writing, or you may wish to sell via a timed online auction. Your auctioneer will advise you on which is likely to be the best route for your property, as there are benefits to both methods. Once the bidding process begins on your lot, the auctioneer will continue with incremental price increases until bidding interest ceases, in which circumstance, the hammer will be hit and your property will be sold to the highest bidder, in the case that their bid is equal to or greater than your reserve price.
If your home is not sold, then as mentioned above it will be withdrawn from the auction. At SDL Auctions, we continue to advertise unsold properties on our website for four weeks, whereby potential buyers are able to make you an offer.
How long will it take to complete the sale?
If a successful bid is made, then the sale is binding from the day of the auction and you will exchange contracts. If sold under unconditional terms, then the buyer will provide a 10% deposit on the day and will then have a further 20 working days to secure the rest of the funds and complete the sale. If sold under conditional terms, then instead the buyer will pay a non-refundable fee to reserve the property, which can vary depending on the bid they have made. The buyer then has 40 working days in which they are able to get their affairs in order, such as arranging a mortgage, before completion. The method you wish to sell by is completely up to you, and your auctioneer will again help you and advise you on the best course for your particular property.
Interested in selling your property by auction? Whether a residential, mixed-use, commercial property or land, we can help. Book your free sales valuation with SDL Auctions today.