Selling property at auction FAQ’s
Frequently asked questions about selling at auction
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We’ve answered some of your frequently asked questions about selling property at auction.
Auction can be a quick and reliable way to sell a property. And there are reasons why highly profit driven companies (e.g. banks and mortgage companies) sell their properties through auction. But auction is not suited to all property types or personal circumstances. If you’re weighing up your options and need help deciding whether to sell through an estate agent or at auction then you might find these FAQ’s to be useful.
Last updated by Mark Grantham on 27th September 2017
NAVIGATE THIS GUIDE:
>> Benefits of an auction sale
>> Disadvantages of auction
>> Costs for selling at auction
>> Auction sale timescales
>> What’s an auction reserve price?
>> Auction legal pack
>> What is a modern auction?
>> Should I accept an offer before?
>> What if my property doesn’t sell?
>> Is my property suitable?
>> When does a seller need to vacate?
A. The main benefits of selling at auction are speed, reliability and transparency. The total lead time (from booking into auction to receiving completion funds) is around 8 weeks. Auction is reliable because on the day of the auction contracts are exchanged with a date for completion agreed. Auction is a transparent process, opening a property up to the whole market; the seller provides information to many buyers and it’s up to the buyers to decide how much to bid for the property. This often results in a property being sold for a lot more than any other method of sale. There is no one to manipulate the sale as there would be with a sale through an estate agent.
A. The concern most people have when selling their property at auction is the worry that only one person will turn up on auction day and the property will end up being sold at the reserve price. That’s why some view auction as a “bit of a gamble”. But like most risks, there are ways to manage and reduce the chances of loss. Also, auction isn’t suitable for every type of property, there are some property types where using an estate agent will achieve a better sale price than auction e.g. luxury properties.
Need more help? Call us on 020 7183 2623 or send us an enquiry online.
A. Auction fees are negotiable and around the same as you would expect to pay if you were selling a property through an estate agent. Commission is typically in the region of 2% and that’s only paid of the sale is successful. Some auctioneers also charge an “entry fee” of about £300 and will usually be happy to take payment after the sale, only if the property sells. For more information about auction costs see the page auction fees for selling property.
A. The total lead time is around 8 weeks. If you booked your property into auction today you could expect to exchange contracts in 4 weeks and complete the sale 4 weeks later. We’ve provided more information about the auction process and timescales.
A. The reserve price is the minimum amount a seller will accept for their property. If a property sells for the reserve price or more, the seller is obligated to sell. You can find more information about the reserve price and how it’s calculated.
A. The auction legal pack contains all the important documents for prospective buyers to view before the auction. The documents include the title document, deeds, searches, contract of sale etc. The auction legal pack is compiled by the sellers solicitor.
A. If you’re struggling to sell your property, your estate agent might suggest using their in-house modern auction. These are online auctions that operate on a similar basis to ebay, the winning bidder will have to pay a reservation fee (usually around 5%) but they are not obligated to exchange contracts. Some people argue that modern/online auctions aren’t as reliable as traditional property auctions and that final sale prices achieved tend to lower because they don’t have the competitive bidding effect that’s achieved by having prospective buyers together in the same room.
A. The marketing carried out by an auction company will usually generate a good level of interest and you might receive offers before the auction. We always recommend referring any prospective buyers to the auction company to let them suss out whether the buyer is genuine and credible. Even if they are a credible buyer it’s usually worth letting the property run on to auction rather than accepting an offer before the auction. You never know, the prospective buyer might know something about your property that you don’t – there might be more potential than you thought! By letting prospective buyers fight it out for your property you will see the benefits of competitive bidding that auction offers.
A. If bidding doesn’t reach the reserve price on auction day then a property remains unsold. The auctioneer will try to arrange a sale immediately after the auction by contacting buyers who have expressed an interest. If there’s still no sale then most auctioneers will carry on marketing the property for a month or so after the auction to try and agree a sale. If the property is still unsold then you can either re-enter into the next auction or try another method of sale. The auctioneers commission will not be payable if the property fails to sell (subject to the particular terms you sign) but there may be fees payable to your solicitor for preparation of the legal pack.
A. Pretty much any type of property can be sold at auction, unless there are restrictions in the lease or deed (e.g. some retirement properties have such a clause in the lease). Although some properties are better off sold through an estate agent (e.g. luxury properties that need a longer marketing period than the usual 4 weeks offered at auction) where they will benefit from a more managed sale an estate agent can offer. Some properties sell particularly well at auction: properties in need of improvement, tenanted properties, investments, development propositions, building land, mixed use properties, short lease flats, commercial investments and unique properties. For more information please see our guide to what types of property are best suited to an auction sale.
When a property sells at auction, legal contracts are exchanged on auction day and the standard timescale for completion is 28 days (i.e. 4 weeks) – that’s when keys are passed to the buyer and the seller must vacate the property. If a seller needs more time to move out of the property they can ask their solicitor to change the completion date (this must be done before the auction). It’s not unusual to see auction properties listed with completion dates as “6 weeks or earlier by mutual agreement.” This means completion will take place 6 weeks after auction day, unless both the buyer and seller are in a position to complete sooner.
Find out more about auction reserve prices and why they’re so important!
ℹ Top tip
When selling a property at auction it’s quite common for sellers to receive offers before auction day. Although it can be tempting to secure a sale by accepting an offer, if there’s a good level of interest in the property then why not let bidders fight it out against other buyers on auction day!
Find an auctioneer
Need help choosing a property auctioneer? Please contact us on 020 7183 2623 or send us an enquiry online.
🔍 Also see
💬 Auction talk
The word “auction” comes from the Latin word meaning “to increase” and is a method of sale designed to have a buyer pay as much as possible, without any ceiling price.
⚠ Don’t forget
Be sure to check that the reserve price you agree on is enough to cover all of your costs, including auction and legal fees.