Auction fees for selling property
Costs for selling your house at auction…
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How much are property auction fees?
Selling a property at auction costs less than most people think. The total cost is about the same you would expect to pay a traditional high street estate agent. There are 3 costs to consider when selling a property at auction:
(1) COMMISSION – The auctioneers commission is around 2% + VAT of the final sale price and that’s only paid when the property successfully sells.
(2) ENTRY FEE – Most auctioneers request an upfront catalogue/entry fee of around £200+VAT or more, but it may be possible to postpone payment until after the property has successfully sold.
(3) AUCTION LEGAL PACK – The seller’s solicitor is responsible for preparing the auction legal pack at the cost of £200 or more, which is payable before the auction.
Last updated by Mark Grantham on 12th October 2017
Passing your costs to the buyer
A key benefit of selling at auction is the complete control the seller has over the contract of sale, there’s no input from the buyer. This means the seller can dictate terms like the completion date, responsibilities of the buyer after exchange and any extra costs to be paid by the buyer.
By adding a simple clause to the contract of sale it’s possible to pass all (or part) of your auction fees and legal cost to the buyer, in fact it’s standard practice for regular auction sellers (e.g. property traders, banks and local authorities). Some buyers will not bid as high for the property if they spot the clause in the legal pack, but others will not worry.
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Compared to some of the newer methods of selling, such as paying an online estate agent a fixed fee, selling a property at auction may seem relatively expensive – it’s worth a quick cost benefit analysis to see if auction will pay off for you. The starting rate for an auctioneer’s commission will usually be around 2.5% to 3% + VAT and that’s only paid when the property successfully sells. The commission can sometimes be negotiated down to the 2% level. So if a property sells for £200,000 the commission payable to the auctioneer would be £4,000 + VAT.
The total costs for selling a property at auction include the auctioneers commission of around 2%+VAT of the final sale price. Plus the entry fee of between £200 to £500+VAT. And the auction legal pack costing at least £200+VAT.
For higher value or particularly saleable properties the auctioneer might be prepared to come down a bit, but there is a lot of organising and marketing that takes place for the auctioneer to be able to justify their fee.
There will usually be a minimum selling fee of anything from £1,500 upwards – so if a low value property (such as a garage) sells for £10,000 the 2% commission rate will not apply, otherwise the fee would only be £200. Instead the auctioneer will charge the minimum selling fee.
Want to find out what price your property will sell for at auction? Request a free auction estimate and helpful tips to selling at auction.
How much does it cost to prepare the auction legal pack?
The auction legal pack is a crucial for the successful sale of a property at auction, it contains all the legal information (e.g. land registry documents, deeds, searches, property information questionnaires, lease documents, tenancy agreements etc) relating to the property. So the more information there is in the legal pack the more confident prospective buyers will be when bidding on auction day. It’s therefore important not to cut costs when preparing the legal pack as it may adversely affect the final sale price. Costs for preparing an auction legal pack for a freehold property can be anything from £200 upwards. For a leasehold property the cost of obtaining the management information pack from the freeholder/landlord will add another £200 or more.
Most of these legal costs are not unique to selling at auction. When selling through an estate agent or privately the seller will also need to prepare legal documents for the prospective buyer. It’s only the searches (local authority search, water search etc) that are obtained by the buyer in the case of an estate agency sale, but by the seller in the case of an auciton sale.
Other costs to consider when selling a property
As with selling a property through an estate agent or privately, there are other costs to be considered when selling a property, they include; legal fees, moving costs and taxes that might be due. For example capital gains tax on buy-to-let properties and inheritance taxes for probate sale. Also consider whether any early redemption penalties might be due on your mortgage or secured loans. These are all payments your solicitor will be able to help you calculate when determining your bottom line sale price i.e. your reserve price.
If the property doesn’t sell at auction there will usually not be any costs or obligations to the seller, unless stated in the auction terms.
Are there any costs if a property doesn’t sell at auction?
Just like selling through a traditional high street estate agent, the auctioneers commission works on a “no sale no fee basis”. So the sales commission is only payable when the property is sold and contacts are exchanged, without that happening the auctioneer won’t charge their fee. If a property fails to sell the only costs incurred by the seller would be their legal fees (for preparation of the auction legal pack) and any entry/catalogue fee that may have been paid before the auction.
With so many low-cost online estate agents to choose from, why would anyone consider paying thousands of pounds in commission to sell their property at auction? Apart from the speed and reliability an auction sale offers, from a purely financial perspective, is it worth it? Can you achieve a higher sale price at auction compared to any other method of sale? It depends on the type of property being sold – some properties sell for considerably more at auction compared to estate agency sales due to two key features of auction; competition and transparency.
Competition – One type of property that sells particularly well at auction are houses in need of modernisation, especially if they’re not suitable mortgage lending. Prospective buyers view these properties as having potential. Property developers, amateur diyer’s and even ambitious owner occupiers will compete to buy the property in the knowledge they’ll be able to refurbish the property cost-effectively and either sell it on for a profit or live there themselves. The key word being compete. In an auction environment, where the price can only go one way (up) it’s the potential of the property that drives the price up amongst multiple bidders. But for any other method of sale (e.g. an estate agency sale) the price is generally chipped away stage by stage as the one single buyer involved in negotiations highlights the faults, so it’s the problems with the property that drives the price down.
Transparency – As talked about above, the state of repair of a property can either be viewed as a problem or as potential. If the buyer highlights all the issues of a property and with the support of the estate agent (who has a high level of influence over negotiations) tells the seller that £100,000 is a fair price, the seller will probably accept it. The sale lacks transparency. In fact, there’s a highly lucrative market that exists for property traders who purchase problem properties through estate agents one week and flip them through auction the next week, where they’re sold for considerably higher prices as properties with potential!
Thinking of selling?
Try our free auction sale price calculator
If a property sold at auction for £200,000 the commission due to the auctioneer would typically be 2%+VAT which would be £4,000+VAT only payable if the property actually sells.
ℹ Top tip
If the auctioneer asks for an “entry fee” payment of £300 or so, ask if the amount can be paid after the auction and only if the property successfully sells.
🔍 Also see
💬 Auction talk
“A real advantage of selling at auction is the competitive effect of having multiple bidders fighting it out for your property, bidding up the price within the space of a few minutes.“