Property auction sale process
Procedures and timescales for selling at auction
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What’s the process for selling a property at auction?
When selling a property at auction, the total lead time from initial consultation with the auctioneer to completion of sale is around 8 weeks. That’s 4+ weeks in the run up to the auction and 3 to 4 weeks from auction day until completion. We’ve provided a timeline showing the procedure counting down to, and the period following auction, which can be useful as a checklist. The exact process and timescales will vary depending on the auctioneer.
Last updated by Mark Grantham on 27th September 2016
The basic steps for selling a property at auction are as follows:
Step 1. Auction appraisal – request free appraisals from a few auctioneers, each appraisal will include a suggested reserve price and details of fees.
Step 2. Instruction – once you have decided on a suitable auctioneer you will need to instruct the auction company by signing their terms of engagement. Once that’s done they can move ahead with preparing the catalogue entry.
Step 3. Legal pack – your solicitor will prepare the legal pack, including local searches. Prospective buyers rely on the legal pack for basic information about the property.
Step 4. Marketing – the type of marketing carried out depends on the auction company. A good auctioneer will distribute their (hard copy) catalogue by post to interested parties, advertise your property on Rightmove & Zoopla, use newspaper advertising etc
Step 5. Reserve price – the reserve price is confirmed prior to auction and will be determined by the level of interest in the property.
Step 6. Auction day – all prospective buyers will have the opportunity to bid for your property on auction day, and depending on the auctioneer that can be by phone or internet as well as attending the auction room. Once the gavel falls a legally binding contract is formed. The buyer makes a payment of 10% of the sale price.
Step 7. Completion – the auctioneer issues your solicitor with a memo of sale under common auction conditions and completion usually takes place 28 days after the auction, but that can be altered if you wish.
Step 8. Unsold lots – in the event that a property doesn’t sell at auction, the auctioneer will contact all interested parties and make the property available post auction. In many cases properties that are not sold on auction day will be sold a few days later.
6 to 8 weeks before the auction
Assuming you’ve found a suitable auctioneer, there are a number of things worth doing before signing the auction terms.
1. Instruct a solicitor, let your solicitor know that you plan to sell at auction. If you don’t currently have an appointed solicitor then the auction company will be able to recommend one to you.
2. Make sure your onward plans are provisionally ready, must importantly that you have somewhere to move to by the completion date.
3. If you are selling the property with vacant possession, make sure it will definitely be vacant by the completion date. i.e. you’re ready to serve notice to any tenants etc.
4. Double check that the proceeds of sale (the sale price less any mortgages or loans) will be sufficient to cover your future purchase and any other costs.
5. If you’ve been signed up to a sole agency agreement with an estate agent then now is the time to serve notice to them to avoid the risk of paying double commission.
The deadline for entries is usually about 4 weeks before the auction. By this time you will need to have signed and returned the auction terms and provided the auction company with contact details for your solicitor. You should also be prepared for the likely prospect of your property selling, so have your moving plans ready.
As straightforward as selling at auction is, some preparation is required to ensure the property achieves its maximum sale price, for the sellers part (and their solicitor) that mainly consists of preparation of the legal pack, which consists of the title documents, a completed property information questionnaire, conditions of sale, special conditions of sale, contract of sale, an EPC, the lease and management information pack (if applicable), tenancy agreement (if tenanted), a local authority search, a water search and any other searches recommended by your solicitor. It’s the job of your solicitor to make sure all these documents are in place in good time for the auction. A good solicitor will be aware that some documents (e.g. the local authority search) will take a long time to arrive, so will prioritise their application.
In preparation for marketing the auction company will ask you to sign-off on marketing particulars they have prepared (a description of the property & photographs), to make sure they are accurate.
This is when the marketing activity really picks up. One of the great benefits of selling at auction is the intense competition it can generate over a property. Come auction day there could potentially be dozens of prospective buyers fighting it out for your property and the only way for them to win is to offer the highest price. To maximise this “competition effect” a good auctioneer will present the details of your property to as many prospective buyers as possible. This could be in the form of: online advertising (e.g. a listing on Rightmove and Zoopla), emails to the auctioneer’s database of prospective buyers, distribution of the printed catalogue, newspaper advertising, a for sale sign outside the property, letters sent to known local buyers and making local estate agents aware of the property. The list is virtually endless.
The auction catalogue is printed and distributed to a wide audience of prospective buyers, ranging from seasoned investors to first time buyers. A good, well established auctioneer will have a database of tens or even hundreds of thousands of registered buyers and they will send details of your property to anyone who has expressed an interest in buying a property that meets their criteria.
A schedule of viewing times is also sent out with the catalogue. Viewings are usually conducted as an “open house” at pre-arranged times, usually twice a week for 3 weeks in the run up to the auction. For very popular properties it’s quite usual to expect 20+ people attending each viewing. There will usually be a viewing agent appointed to manage things, so you don’t need to worry about being host!
2 weeks before the auction
By now the auctioneer will have a good idea of how much interest there is in the property and will have often received questions from prospective buyers. You don’t have to respond to any of these, but it can help if you do. Providing prospective buyers with the information they need means they will bid with confidence on auction day.
With one week of marketing and viewings completed the auctioneer may already have received some offers for your property, if they’re realistic offers the auctioneer will let you know about them and if you choose to accept an offer before auction day the auctioneer will arrange for contracts to be exchanged and for the property to be withdrawn from auction. Think carefully about accepting an offer before auction, it can be wise to let the auction take its course and for the property to find its top price in the auction room.
All documents should be in the legal pack by now, if they’re not then the auctioneer will be chasing your solicitor. There are often prospective buyers who will want to review the legal pack before making the effort to view a property, so it’s important to make sure the pack is complete before the last week of viewings.
1 week before the auction
The auction company will provide you with feedback on the marketing activity so far. The two key numbers they look at are the number of people who have viewed the property and the number of legal packs downloaded. You will also be told if there are any telephone bidders booked in or proxy bids received.
If there has been very little interest in the property then the auctioneer might suggest withdrawing the property from auction and entering it into a subsequent auction. Failure to generate interest is often due to the fact that the legal pack was not prepared in time.
There is an opportunity to revise the reserve price before the auction, the auctioneer will be able to offer you advice about adjusting the reserve price, if need be.
There is no requirement for the seller to attend the auction room on the day, but it can be an exciting experience if you are able to make it there. If you can’t make it to the auction then you can watch online (most auctions are lived streamed) or at least see the results updated on the auctioneers website.
Before the auctioneer takes to the rostrum, prospective bidders will have a chance to check through any last minute changes to legal packs or changes to the catalogue. These will be printed on what is known as an addendum or announcement sheet.
When it’s time to auction your property, the auctioneer will announce the lot number, the address and briefly describe the property. They will also make any prospective buyers aware of any final amendments and make sure those bidding by phone are connected. The auctioneer will usually start the bidding at a low number, often well below the reserve price, this is done to stimulate interest and achieve some momentum in bidding up the price.
If all goes well with the marketing there could be dozens of people attending the auction room to bid on your property. The bidding is usually led by 2 or 3 prospective buyers and as the price increases and they fall away, other buyers will join in. It only takes two keen bidders for the price to continue increasing. When there is only one buyer bidding, the property has found its top price and the auctioneer will scan the auction room looking for any more bids, and will announce “any more bids, for the first time, for the second time, for the third time, sold” then the gavel will fall. At that point contracts are exchanged and the successful bidder is taken to the “contracts room” to complete the necessary paperwork and pay the deposit, which is usually 10% of the purchase price.
Bidding can be complete in anything from 30 seconds to 3 minutes, it depends on how many bidders there are and of course what price the bidding reaches.
The auction company will contact you at the end of the auction, or the day after, to let you know what price your property sold for. If the property didn’t sell the auctioneer will contact all prospective buyers who expressed an interest in the property and let you know the best offer they have received, so a sale can be agreed after the auction, but only if you are happy with the price offered.
The video below, produced by Butters John Bee provides an overview of what happens on auction day.
Overview of auction day. Video produced by Butters John Bee.
1 week after the auction
It can quite often be the case that the buyer is in a position to complete sooner than the contracted completion date. If that is the case your solicitor will be in touch with you to request permission for an earlier completion date, if that suits you.
Unless you’ve completed already, the contractual completion date will usually be 3 or 4 weeks after the auction date, so you will have to be ready to vacate the property and hand the keys to the new owner, usually via your solicitor. Your solicitor will transfer the proceeds of sale to your bank account on completion day, or if you are moving home they will make the necessary arrangements for you onward move.
ℹ Top auction tip
To achieve the best sale price at auction it’s important to provide prospective buyers with as much relevant information about the property as you can, so ask your solicitor to begin preparing the legal pack as soon as possible to ensure all the information arrives in good time. This will give prospective buyers the confidence to bid higher on auction day.
🔍 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.“
Auction legal pack
The auction legal pack contains copies of the Title Deeds, Special Conditions of Sale, Land Registry Search, Leases (if applicable), various questionnaires and other pertinent documents.
The sellers solicitor is responsible for preparing the legal pack. The only document the seller needs to assist with is the Property Information Questionnaire.
The auction catalogue lists all the properties (known as lots) included in the next auction. For a big, national auctioneer this might be as many as 250 lots.
Catalogues are distributed to the thousands of prospective buyers who have registered an interest in auction in general, or a particular lot. The online version of the catalogue can be distributed to many more prospective buyers.