The modern method of auction has many benefits, but there are circumstances where a traditional live public auction still remains the best option.1. Legal exchange of contracts.
In a traditional live property auction the sale is unconditional. The buyer puts down a 10% deposit and exchanges contracts on auction day – meaning the buyer is legally committed to proceed to completion of purchase (it’s assumed the buyer has read the auction legal pack and satisfied themselves of all enquiries) so there’s no backing out for buyer or seller. The modern method works differently; the buyer doesn’t legally exchange contracts but puts down a non-refundable deposit (typically 5% or more of the purchase price) meaning the buyer is financially committed, but not legally committed to purchase the property. Contracts are exchanged 28 days after the auction has ended and we’re advised by modern method auctioneers that 99% of sales go through to exchange and completion.2. Properties not suitable for mortgage lending.
On the whole “cash buyer only” properties are best sold at traditional auction, mainly because traditional auction attracts an audience of cash buyers. That’s not to say “cash buyer only” properties cannot be sold using the modern method of auction or even through an estate agency sale, but if you want a high degree of certainty over your sale a traditional public auction always wins. We always recommend that properties in need of modernisation, particularly probate properties are sold at auction (either traditional or modern method) rather than a normal estate agency sale, this article about why to avoid selling a poor condition property with an estate agent
explains why.3. Traditional auction marketing
is unique to any other method of sale, its speed and intensity cannot be compared to any other type of property marketing. Within the space of 3 weeks the auction catalogue is printed, the legal pack is available to prospective buyers, open house viewings are conducted and the anticipation of auction day counts down. For residential properties in particular, buyers often become emotionally involved in their prospective purchase, having invested time researching and planning what they can do with the property. Buyers like the guarantee and immediacy of purchase – they know that if they really want the property all
they have to do is outbid the competition and it’s theirs – and there’s no risk of the seller backing out.And the real difference of traditional public auction versus any other type of sale is of course auction day. There may be dozens of bidders in the auction room, on the phone or having already placed their proxy bid.4. Competitive live bidding
is the key differentiator of traditional auction. The competitive bidding environment cannot be replicated by any other method of sale. Unless you’ve bought at auction yourself, you will never know what that sense of excitement is like! The heat of the moment often takes prospective buyers away from their senses – rational thinking takes a short break. Bidders physically being in the room together, in the flesh, seems to do strange things! And if you add to the mix that some bidders might have travelled long distances, not wanting to go home empty handed, the competition can end up producing sale prices way beyond expectations.