One of the ways to sell your home today is through a property auction, but what does this involve? Can anyone sell their home at an auction? Are there any fees associated with it? How do you showcase your home at auction? Houses for sale can make quite a bit of money at an auction, but understanding exactly how the process works is a must.
Selling your home at an auction
There was a time when buying and selling a home at an auction was deemed to be a risky venture and not recommended for novices. But a lot has changed in the world of property auctions, and today, it has become a popular method of selling a home fast.
Why would anyone actually consider an auction? There are many reasons to think about it.
- Your home may not have attracted any buyers through the usual process of selling a home.
- Your home may be unusual, or it may need major repairs it can be sold.
- Your home may have structural issues.
- You are not able to secure a conventional mortgage on the home, and thus need to sell it.
No matter why you choose to sell at auction, the one great benefit is that an auction immediately extends the number of potential buyers which may include builders, investors, developers, and those who wish to fix and flip a home. The majority of these potential buyers are looking for a property that can be extended or redeveloped, which may be either then sold or rented out. Of course, some of the properties at an auction may even be eligible for financing and used as a home. Hence, whatever the state of your home, an auction is worth considering.
The Auction Process
If you want to sell your home at auction, the process is a fairly simple one. Begin by selecting an auction house. You want an established and well-known auction option because it will also attract more buyers. Do the basic leg work and know as much as you can about the auction home. You’ll want to think about fees as you consider the right auction house to meet your needs. These can range from a few hundred to a few thousand pounds. They cover the administrative costs such as listing your property in the auction catalogue and advertising your home. If your home sells, you’ll also pay a commission fee.
Once you’ve selected the available auction houses for sale, you’ll need to register your property with the auction house so they can begin the process of marketing it. Initially, they’ll send you a copy of the listing they intend to include. Proof it carefully to ensure everything is accurate.
Next, you’ll want to contact a solicitor. To prepare for the final sale, you will need to consult with a solicitor. The solicitor fees do vary from £300 to £1000, so shop around for the best rate.
The next step is to set a valuation reserve price. You will need to set the lowest minimum price that you will accept for your home; this figure is usually kept confidential between you and the auctioneer. If all the offers are lower than this minimum figure, the property is usually withdrawn from the auction
On the day of the auction, you can either be physically present or wait for the auction house to call you with the outcome. If the home is sold, it usually takes several days before you get your money- minus the fees.
Are Auctions Held Online?
Online auctions have just started to take off in the UK; they are referred to as the ‘modern auction method of selling a home. There are many benefits to this method. An online auction offers more flexibility as it allows the seller to adjust the price; secondly, if the property does not sell the first time, you can always enter a second auction.
Just like the traditional property auction, the process of reserving and setting the price is done in the same manner. The big advantage of the online auction is that your home can be displayed for 30 days (known as the auction timer).
The bidding for the home occurs online 24/7. Potential buyers can see the starting and ongoing bids. At the end of the auction period, the highest bidder gets to buy the home.
Sellers benefit from online auctions as they have few costs. To secure the property, the buyer has to pay a significant reservation upfront fee, so the chance of pulling out is low. However, unlike the traditional auction, there is a long time of completion, which is typically 56 days.
How Much Does It Cost to Sell A House At Auction?
Selling a home at an auction cost slightly less than if you were to go with a realtor. The costs to consider during an auction include the following:
- The auctioneer’s entry fee of about £300 plus VAT.
- A sales fee of 2% + VAT fee to be paid to the auctioneer if the home sells.
- The solicitor fees average about £300.
What Happens If a House Doesn’t Sell at Auction?
Sometimes a home may not sell at an auction; in such a scenario it will be noted as ‘unsold,’ but the auctioneer will continue to market and advertise the property online for a fixed period.
Should I Sell My Home at Auction?
There are many reasons to consider selling your home at auction. Houses for sale in this environment experience some serious benefits. First, there are no delays because the auction is well organised. Sellers view your property and make a bid. The entire process from making a bid to selling of the home can take as little as 4-6 weeks. There are no middlemen, like an estate agent, and thus you save a ton of money on fees. Moreover, if there are several buyers for your home, then the bidding process can drive the price of your home upward.
Maybe one of the biggest benefits, though, is that once the auctioneer’s gavel falls, the property is sold. There is no going back on a deal. You get paid rather quickly, too. Once the contract is signed and conveyancing is done, the buyer has to pay a 10% deposit on the same day and the rest within 4 weeks.
For as many benefits, though, there are also some drawbacks. If your home is sold, you will quickly need to find a place to stay. Moreover, the auction fees are not minuscule and include the auction entry fee, solicitor’s fees, and the auction house fee plus VAT in commission, which on average are slightly more than what you would pay an estate agent. Remember, too, that not all sales are guaranteed. Although you are charged fees, there is no guarantee that your home will be sold at auction. Finally, the final home price at an auction is not in your hands. You only set the minimum, but the final bidding depends on the potential buyer. Hence you may get less than what you were hoping for.
Is an auction right for you? Weigh both the pros and the cons before you make a decision.
