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What price do properties sell for at auction?
If we set aside the main benefits of auction (e.g. quick, reliable and hassle-free) and assume the seller has all methods of sale available but wants to achieve the highest sale price, for what type of property would auction be the best option?
Last updated by Mark Grantham on 6th December 2016
There are certain properties that sell particularly well at auction, they can be broadly categorised into 2 groups:
1. Properties with a high level of demand and limited supply. A good example would be a 2 or 3 bed, terraced house in a popular area, that is structurally sound but in need of modernisation or have potential to extend. This is what an auctioneer would refer to as good quality stock. The audience of buyers is wide and varied, but the key type of buyer these properties attract are owner occupiers who have tried buying through an estate agent but been beaten to it by other buyers. For these types of property, in a seller’s market, it’s not unusual to see the eventual auction sale price far exceed the price an estate agent might have suggested as an asking price, we’ve seen that happen many times.
2. Niche properties that are difficult to value. It’s quite common to see stories in the newspaper of record breaking prices being achieved at auction for peculiar properties, such as extremely narrow terraced houses, tiny studio flats and even beach huts. Also London parking spaces/garages tend to find their best price at auction – the seller benefiting from the fierce rivalry of neighbours prepared to pay over the odds for a rare-to-find parking space. These types of land and property benefit from the competitive bidding effect of auction. A good estate agent might be able to spot the demand for a property and spend a few days or weeks taking best bids from prospective buyers, but to achieve the best price nothing beats having all interested parties in the same room (or bidding by phone), together at the same time.
The type of property that doesn’t sell too well at auction is very high-end, premium housing e.g. a recently refurbished penthouse apartment in Knightsbridge. Or the “best house on the street” where all the potential for extension and improvement has already been taken care of. Although there can be a high level of demand for these types of properties and you do occasional see them at auction, they’re better suited to a sale through an estate agent, where they benefit from the salesmanship of a good, persuasive estate agent.
So in summary, yes you can achieve the full market value for your property at auction if it fits into the 2 categories above.
What if bidding doesn’t meet the reserve price?
In cases where a property hasn’t generated much interest, the auctioneer will “bid off the wall” up to the reserve price level. If there is no one bidding at the reserve price then the property remains unsold. But if there is one bidder in the room then the property will sell at the reserve price, as the video below illustrates.
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