There are many reasons why homeowners choose to sell their property at auction. Whether it’s to initiate a bidding war or find a reliable buyer as quickly as possible, a house auction is a tried-and-tested way to sell homes in the UK.
But the auction process is very different from the traditional way of selling on the open market. It’s best to do your homework before you choose this path, which is why we’ve put together this guide.
How do property auctions work?
Not all auction houses approach the process in exactly the same way. However, if you sell a home at auction in the UK, you’re likely to encounter the following six stages.
- Consultation — You’ll meet officials of the auction house to discuss your property. They tell you if your price expectations are realistic. And they’ll work with you to set an appropriate reserve price.
- Fees — Before an auction house lists your home for sale, all the related fees and commissions must be agreed.
- Inspection — A range of photos, measurements and readings are taken before your house can be listed at auction. Surveyors appointed by the auction house usually carry out these tasks.
- Marketing — It is in the best interests of auction houses to promote your home as much as possible. A range of marketing materials spread the word about your property. A representative from the auction house will keep you abreast of developments.
- The auction — If auctioneers have marketed your home well, you should be able to enjoy a competitive bidding process.
- The legal stuff — Once a winner is declared, he or she must pay a 10% deposit. There is a lot of paperwork to complete at this point.
How long does the average property auction take?
From the initial approach to the auction house to the funds being transferred to your bank can take as little as two months. However, you’ll need to list your house for auction at least six weeks before the event. And there’s a 28-day completion process after the hammer falls.
Is my home suitable for sale at a property auction?
The vast majority of homes in the UK are eligible to be sold at auction. In fact, if your home needs major repairs or renovations, sale by auction may be the best option. Regardless of your home’s state of repair, there are always investors and “fixer-uppers” searching for properties like yours. And many of these buyers turn to auctions first.
How much does a property auction cost in the UK?
Auction fees in the UK vary considerably. Always get a full breakdown of the costs before you decide on an auction house. In most cases, you’ll need to pay a percentage of the final sale price — around 2.5%. You’ll also need to pay for a legal pack and conveyancing, around £500 and £750 respectively.
What are the advantages of selling houses at auction?
Selling your property at auction is an excellent way of taking the hassle out of the process. You’re marketing your home to cash buyers, or buyers with the necessary finance already in place. The deposit is required on the day of the auction, so you’re effectively getting a chain-free sale.
If you’re selling more than one property at the same time — perhaps if you’re liquidating a property portfolio, selling at auction speeds up the process considerably.
But perhaps the single most impressive benefit of property auctions is the bidding process. If you can generate enough interest through marketing, you can create a competitive process in which buyers may pay a little more than the average market price.
But not everything in the property auction garden is rosy. The fees involved are typically higher than those charged by estate agents. You may not achieve your reserve price, in which case you lose your fees. And there’s no guarantee the final price will match your expectations.
If you need to sell your house fast, a property auction may not be the best road to take. Even the fastest of sales can take two to three months to complete. But selling your home directly to us cuts out the nonsense. And you might get the cash you need within 28 days of the initial offer being made.