When selling your house or property at auction you will need to instruct an auction house, set a reserve price for the property and instruct solicitors.

Selling your house at Auction

Top Tip

You will get the best price for your property at auction, selling either at an established local auction or a big London auction. These will attract the highest offers. Avoid selling your house at auction in July and August at auction if you can.

Key Fact

The Common Auction Conditions allow you to bid on your own property up to the reserve price. Make sure you understand the implications of this, and the auction house’s attitude to setting reserve and guide prices. The lower your reserve price, all things being equal, the more competitive you can expect bidding to be.

Key Fact

Many potential buyers are put off buying a property without vacant possession. If your property will have tenants in situ in the run up to the date of the auction try to come to an arrangement so the property is at least accessible for block viewings.

Key Fact

About 10% of properties selling at auction are sold before the day of the auction itself. Emphasise to the auctioneer that you are interested in pre auction offers. On a practical level, at viewings, auction staff are often asked whether the vendor is likely to be open to offers.

Top Tip

Before putting a house up for auction the owner should make sure they know how much it is worth. The property should be valued so that a realistic reserve price can be set. The reserve price is a pre-set price below which the vendor does not want the property to be sold.

 

 

 

 

 

Selling a house at Auction

What kind of houses and properties are sold at auction?

Selling at auction is best for people who want a quick sale. The whole process takes a maximum of 28 days from the fall of the hammer. Auctioneers will advise you on the suitability of your house for auction but certain types of properties are more suitable to be sold at auction than by normal means. These include:

Advantages of Selling your house or property at auction

Selling a house at auctionYou get a commitment to buy. The contract of sale comes into force as soon as the auctioneers hammer falls.

The timeframe is usually shorter than for properties sold through an estate agent.

The format lets bidders drive up prices. Competitive bidding  for some types of property can achieve close to open market or better prices.

Disadvantages of Selling your house or property at auction

If there is no demand on the day of your sale, you might end up selling you house for below its market value.

You will have to pay your solicitor to be present at the auction in order to sort out any last-minute irregularities and answer questions. Your sale will proceed more smoothly if you use a lawyer familiar with the Common Auction Conditions. Prepare the legal pack for the property in good time to attract interest prior to the auction.

Selling your house at auction can be more expensive than selling it via an Estate Agent. Also, you will have to cover certain expenses even if your property does not sell.

Selling you house at Auction - Choosing an Auction House

Auctioneers are bound by a ‘Duty of Care’. As a potential vendor, they are obliged to advise you on the best method of selling your property, taking into account the circumstances under which you are selling.

Choose an auctioneer who offers property similar to yours within the same price range.  You will have a legal contract with the auction house which outlines your obligations as the vendor. It is referred to as the “Terms of Agency”. Details will include:

It is your responsibility to make sure the description of the property in the auction catalogue is accurate. If it’s not, it may give your buyer the right to pull-out and claim the return of their deposit. Instruct your solicitor to prepare a contract which contains the terms and conditions of the sale; this will be included in the auctioneer's brochure.

The Costs of selling you house or property at auction

Fees are generally of two kinds: entry fees and sale fees.

The auctioneer will charge you for the advertisement in brochures and catalogues. These can run to several thousand for the top London auction houses. You will have to pay this cost regardless of whether your property is sold or not.

The sale fee is a commission based charge and is typically between 1.5% and 3.0% of the final selling price.

Selling you house or property at Auction - Completion

When the hammer falls, the sale is official and legally binding. Once the buyer has signed the memorandum of sale the buyer is given the legal pack and a copy of the memorandum. In some cases the paperwork will be sent directly to the buyer’s solicitor. The buyer will have to pay you 10 per cent of the agreed sales price straight away, the outstanding balance within 28 days after the auction.