Article by Naomi Webb
Selling a house at auction can be a simple and hassle-free route to a quick sale. But there are a few risks involved too. Here’s what you should consider if you’re thinking of putting your home under the hammer.
Quick and simple sales
Selling your home at an auction is simple. You enter the property on the auction house website, the auction takes place on a pre-determined date and, if the property sells, the buyer must immediately pay a 10% deposit and the remaining 90% within one month of the sale. All buyers at auction enter a legally binding agreement that means you’re protected from gazundering (lowering the offer amount) after the auction is over.
However, auction fees can vary. Consumer watchdog Which? suggests that sellers budget for a fee of £300-£400 to enter a property, and an auctioneers’ fee of around 2.5% of the hammer price, plus VAT. You’ll also need a solicitor to help with legal documents.
According to Which?, property auctions have grown in popularity in recent years, with more mainstream buyers and sellers attending in the hope of a quick sale or a bargain. However, auctions are still dominated by investors looking for long-term renovation projects that will make them money. Consequently, unusual properties or those in need of TLC are more likely to get attention.
Because buyers are probably going to be investors rather than locals seeking a new home, the most appropriate buyers aren’t always at the local auction house. Make sure to do your research to find an auction that attracts the right buyers for your building.
Risk and reward
What you sacrifice for this simplicity is an element of control. Although you can pre-agree a reserve price and estimate with the auctioneer, you can’t control or negotiate the final price other than by setting a reserve and hoping that the property sells.
Generally, the auctioneer will catalogue your property, which means you can’t highlight key selling points; although you will usually be given the chance to check the catalogue for errors.
So while auctions may seem simple, it’s important to be aware of the processes involved. Once you are, clarify the fees and reserve price, make sure you’re in front of the right buyers, and then just wait to hear that hammer drop.