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Selling A House At Auction


We know the property market can be confusing, there are lots of terms and confusing jargon that not everyone understands!

Increasing numbers of people are looking to auction houses to sell their properties. Perhaps this is because of the patchy property market (strong in some hotspots, slow in other areas) or because some traditional buyers are still struggling to raise sufficient finance.

Whatever the reason, selling at auction can be a good alternative to the traditional route of selling through an estate agent.

Buyers love auctions – it’s fast, exciting and relatively straight forward. Better still, there are often plenty of bargains to be had!

So here is some finer detail about the auction world.


Types Of Properties You'll See At Auction


Mostly they’ll just be from people wanting to move house quickly – it can take just a month or so from start to finish so it’s a very quick house sale – but there will probably be lots of bank repossessions, probate sales and problem properties too.

This is why buyers at auction must be especially cautious, once the hammer falls there are no comebacks!


Process Of Selling A House At Auction


Information that auction companies require include the address of your property, a description, a photograph, tenure and tenancy (if applicable) details, floor plan or site plan and anything else you consider to be material in selling your home. They will generally visit the property to value and prepare details but they may leave this to a joint auctioneer, usually a local estate agent.

Of course there are costs to selling a house at auction, not all auction houses set the same fees, but usually there is an entry fee of around £500 payable up front and around 2% plus VAT of the sale price.

Marketing at auction is different for each company, but a majority use catalogues, online marketing, local newspaper adverts and individual marketing.

After fees have been agreed by you, a legal pack will be prepared containing various documents that are crucial to a house sale, such as title documents and office copy entries so they are available to interested parties either by post or online. A survey is sometimes included.

Selling Property At Auction

Next you’ll need to set a guide price, remember make this attractive to buyers as you don’t want to scare people off with an outrageously high starting price, but also don’t be too generous with a low guide price.

Next you’ll need to set a guide price, remember make this attractive to buyers as you don’t want to scare people off with an outrageously high starting price, but also don’t be too generous with a low guide price.

If your house doesn’t make the reserve price, don’t worry you can also accept the last bid price and the auction terms and conditions still remain – assuming that the bidder is still willing.


Selling At Auction Infographic


Selling House At Auction

How To Buy Properties At Auction


You’ll need a solicitor (and funds) to bid, and remember identification on the day. Check the terms of the auction carefully as there may be pre-registration required before bidding. Be careful of Buyer’s Premiums too. They need to be factored in to the total cost.

If you have your eye on a house it’s best to check a day or two before hand to check if the property you’re interested in is still on the market. It’s not unusual to see properties advertised taken off prior to auction.

It is important to remember that changes can be made to the lot information or conditions of sale, this is called addendum. This is very important as it will affect the memorandum of sale, so don’t go into a bidding war with someone without know the full information!


What Happens Once The Auction Hammer Falls?

Auction Hammer Falling

Well if you are the highest bidder above the reserve price the lot is yours and a legal contract will have been formed. You’ll have to hand over a deposit cheque which is normally 10% of the purchase price and provide identification.

Well if you are the highest bidder above the reserve price the lot is yours and a legal contract will have been formed. You’ll have to hand over a deposit cheque which is normally 10% of the purchase price and provide identification.


Choosing An Auction House When Selling



Video Transcription

Hello my name's Jonathan Rolande and I’m here today on behalf of House Buy Fast to answer a commonly asked question, which is all about auctioning a property.

Basically what you do is instruct an auctioneer and they’ll come along to your property and carry out a valuation for it and also some general marketing advice. Viewings will need to take place in the normal way so you will normally have set viewings where perhaps a local estate agent or something like that will be instructed by the auctioneer to bring people along to the property.

Once they actually go to the auction they’ll obviously bid for the property if they like it and it will go up to a certain price. If this is in excess of your reserve price in other words the minimum price that you’ve set with the auctioneer to actually achieve, so if its in excess of that the property will actually sell.

At that point the hammer hits the desk you’ve exchanged contracts and the buyer is then legally obliged to go through and purchase your property.

The completion date i.e. the date you get the money and actually move out of the property, is usually about 28 days or less after the auction has taken place. This gives you time to get packed up and move and also gives the buyer time to arrange any money and/or works they want to do to the property, etc.

There are fees usually at both ends of the transaction. When you instruct the auctioneer they charge you something between £250 to £1,000 to enter the property into the auction. When they actually sell the property for you, you will normally then pay a fee and that will be in the regime of 2% of the property value plus VAT.

You will also need to pay the Solicitor to prepare a legal pack for you and that will normally be in the regime of about £400 plus VAT, so in total on average about £3,000 to get the property into the auction and hopefully sold.

In summary auctions can be a really good way of selling a property with relatively little stress but of course do remember it is isn't guaranteed and it will probably cost you money whether you do sell or not choose the auctioneer carefully, check the terms and conditions and good luck with the sale.

Auction House Companies In The UK


Picture Sources

Chris Potter, Moira Clunie.