Guide to Selling a House at Auction
If you’re new to the idea of selling a property at auction, this guide will help by providing an overview of the main points to consider, including information about auction sale costs, expected sale prices and timescales.
For many homeowners the task of selling a property occurs just once or twice in a lifetime. That certainly doesn’t allow enough practice to become an expert in the subject. And with a growing range of sale options to choose from, the decision of how to sell can be just as stressful as the sale itself.
Choosing the right method of sale is important! It can make the difference between selling quickly for the best price, or enduring months of frustration ending in no sale at all.
This guide covers the main points to consider when selling a property at auction. For more information please contact us on 0800 862 0206.
Is my property suitable for an auction sale?
Any property can be sold at auction, whether in good or poor condition. It’s often not the condition or type of property that determines whether to sell at auction, but the sellers circumstances. Auction’s ideal for property owners requiring a quick and reliable sale.
The misconception that only properties in poor condition should be sold at auction comes from the fact that properties in poor condition achieve higher sale prices at auction compared to an estate agency sale. It’s not a good idea to sell a poor condition property with an estate agent because buyers are able to chip away at the price stage after stage; offers are reduced after the survey, or after a builder/roofer/electrician has quoted for work that needs doing.
Auction is different, buyers do not have the opportunity to reduce their offer, with an auction sale the price can only increase, the emphasis is on the potential for the property, not the problems.
What price will my home sell for at auction?
Whilst there’s no upper limit to sale prices at auction, fortunately there is a lower limit – and that’s known as the reserve price. The reserve price is a guarantee. Your home will not be allowed to sell for any less than the agreed reserve price.
The reserve price is suggested by the auctioneer and won’t change before auction day. You will need to agree to the auctioneer’s reserve price before booking your property into auction. It’s important to make sure the reserve price is high enough to cover your outstanding mortgage and other costs associated with your move.
How does an auction sale price compare to an estate agency sale price?
The big difference between the sale prices achieved at auction compared to estate agency sales is the direction of negotiation. As the diagram below illustrates; estate agents start with a high “asking price” and in most market conditions (apart from an exceptionally booming market) the asking price will decrease over time and will be further negotiated down by the one and only selected buyer. An auction sale is different, the price starts low and can only increase over the course of competitive bidding.
One of the benefits of selling your house at auction is that you’re not setting an upper limit to the sale price
Not setting an expectation (asking price) makes properties with potential for improvement ideal for auction; competitive bidding between multiple buyers ensures a property finds its top price as the true value and potential of the property is revealed. Compare this to an estate agency sale, where the one and only selected buyer is perfectly entitled to reduce their offer amount for any reason at all (usually after a survey) often with cooperation from the estate agent who is eager to secure a sale at any price, without too many obstacles, so then can earn their commission.
Auction versus estate agent sale prices
With an estate agency sale the asking price starts high and decreases over the course of negotiations. But with an auction sale the price starts low and increases over the course of competitive bidding between multiple buyers.
With an estate agency sale the asking price starts high and decreases over the course of negotiations. But with an auction sale the price starts low (the reserve price) and increases over the course of competitive bidding between multiple buyers.
Find out more about auction reserve prices and why they’re so important!
Allowing multiple bidders to compete for your property not only helps to achieve a higher sale price, it also helps towards ensuring a reliable sale. Estate agency sales are prone to falling through because the one and only selected buyer is quite within their rights to back out of the sale at any time up to the point of formal exchange of contracts.
What is an auction guide price?
The reserve price should not be confused with the guide price. The auction guide price is the amount a property is advertised for. It’s typically set below the reserve price to stimulate interest amongst prospective buyers and encourage bidding. Getting more people through the door converts to more bidders on auction day, helping to ensure a successful sale.
How long does it take to sell a house at auction?
The timescale for selling at auction is 6 to 8 weeks, that’s from the time of booking into auction until completion of sale.
Before auction day. Auctioneers set their deadline for entries about 3 or 4 weeks before auction day. To book into auction you will simply need to sign and return the auctioneers terms of business. Some auctioneers will also need to see copies of ID and proof of address e.g. a copy of a driving licence or passport and a utility bill.
Once the terms of business have been received by the auctioneer, it’s a step-by-step process to auction day. The auctioneer takes care of the market and viewings. And your solicitor will take care of the legal side of things. The seller doesn’t have to do all that much, except respond to their solicitors’ enquiries. Selling at auction is very easy.
On auction day. The buyer signs a legally binding contract and pays a 10% deposit on auction day. Contracts of sale are legally exchanged. At this stage neither the buyer or seller can back out of the sale. At auction, sold means sold.
After auction day. The standard timescale for completion (when the seller moves out of the property, hands over the keys and receives funds from the sale) is 4 weeks from the date of the auction. However, if both the buyer and seller are ready to complete sooner, that can be arranged. For some sellers a 4 week completion is not long enough to arrange removals and move out of the property. The timescale for completion can be extended for a longer period by adding a clause to a document called the Special Conditions, which forms part of the auction legal pack. This will need to be done before auction day. It’s not unusual for completion to be set 6 weeks or 8 weeks after auction day.
How are viewings carried out?
The auction company will arrange block viewings, allowing prospective buyers to view the property in the 3 weeks running up to auction day. There would typically be 5 or 6 block viewings in total, each lasting half an hour. A viewing schedule will be made available (along with the auction catalogue) approximately 3 weeks before auction day, specifying the times and dates of the viewings.
A set of keys will need to be provided to the auction company, so that an auction representative can open up the property and show prospective buyers around. There is no requirement for the seller to be present during the viewings.
Do I need to appoint a solicitor?
Yes, you will need to appoint a solicitor to help with preparation of the auction legal pack and conveyancing. Most property solicitors will be very happy to help with an auction sale. Your solicitor will not be required to attend the auction on auction day.
What happens if my house doesn’t sell at auction?
Auction is one of the most reliable methods of sale available, approximately 75% of properties successfully sell at auction. But still, this is a question that seems to be asked by a lot of homeowners.
If bidding fails to reach the reserve price on auction day, the auctioneer will try to secure a sale as soon as possible after the auction. In some cases that might be within a few minutes of bidding. If a sale cannot be concluded on auction day, the property will be advertised as “unsold” and the auctioneer will continue to advertise the property on the portals (e.g. Rightmove and Zoopla) for a period after the auction. There is no commission to pay if the property doesn’t sell.
If the property remains unsold by this stage, there is also the option of entering the property into a later auction.
Selling at auction
Property auctions offer an ideal route to a quick and reliable house sale. Our guide to selling at auction is intended to provide you with a quick start to understanding the basis of selling a property at auction.
Find an auctioneer
Need help choosing a local property auctioneer? Call 0800 862 0206 or send us an enquiry online.
Download our guide to selling your home at auction