How to sell a property at auction

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With more and more people looking to sell a house quickly and without fuss, one of the routes becoming more popular is selling at auction.

If you are thinking of selling a property at auction it’s important you fully understand the process before parting with your home.

Is your property suitable for a quick house sale at auction?

Most of the buyers attracted to auction houses are generally looking for property that is a refurbishment project or is well priced.

Other types of properties you will find at auctions includes bank repossessions, probate sales and problem properties that are difficult to valuate.

If your property doesn’t fall into one of these categories then you may want to consider carefully whether you would be better off selling through a different route.

The benefits of selling at auction

The benefits of selling at auction include:

  • A quick house sale - completion usually happens within 28 days of the hammer falling.
  • If your property becomes subject of a ‘bidding war’ then you may get a higher price than you could have got elsewhere.
  • Properties that are difficult to sell on the open market often do well at auction.

The drawbacks of selling at auction

There are also some significant drawbacks when selling a property at auction which you should be aware of before listing your home.

These include:

  • Receiving a lower price than you could have been offered elsewhere. There’s no guarantee that your property is going to attract interest or start a ‘bidding war’. It’s common for properties to sell at 40% under market value. In fact, if you have an ‘average’ property then you could probably achieve a better price elsewhere.
  • Many properties fail to sell at auction. There’s no guarantee that you will even get a buyer.
  • You have to pay fees. Auctioning a property can, in fact, be one of the most expensive ways to sell your house. You can expect average fees of 2-2.5% (+VAT) of the selling price. And, if the property doesn’t sell you will still need to pay the fees. You will also need to pay legal expenses and for your solicitor to be present at the auction.
  • You have to allow access to the property for viewings to the public and any surveyors working with potential buyers before the auction takes place.

The auction process

If you decide to go ahead with an auction the first thing you need to do is decide upon an auctioneer. There are some who specialise specifically in property sales. Some estate agents have an auctioneering division which you could take advantage of.

Costs, reputation and the process will all slightly vary so you should familiarise yourself with all of these before you make a decision. Larger, more established auction houses will have larger databases of potential buyers.

You will need to budget around 1.5-3% +VAT of the sale price to cover your costs. Sometimes you are also required to pay for advertising and legal costs ahead of the auction - so make sure you budget for these. You will need to instruct a solicitor to prepare contracts and the legal pack.

Next you will need to choose a reserve price - this is the price that once matched will mean your property has sold. You also need to set a guide price - though make sure you don’t set the price too high and scare off buyers.

Once your property has been advertised in the action catalogue you will need to set aside some time to show interested buyers around.

The auction itself can be exciting and nerve-wracking - you may want to go along to one before selling your home so that you get a better understanding of how they work.

Other ways to sell

If you are looking for a quick house sale but don’t want the risk of putting your property to auction then you should consider using a cash property buying company, such as  Reader’s Digest Property. We have teamed up with trusted property buyers House Buy Fast to offer guaranteed cash sales with no fees and no hassle. To find out more call us on 0800 433 7979 or fill out the form below.