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There are several different ways to sell a property, and trying your luck with an auction is one of them. If you are thinking about using this method to find a buyer for your flat or house, it’s important to learn about the various expenses that you might incur when selling this way, as well as discover the costs – and savings – you could make with other strategies for selling.
- The steps involved with auctioning your house or flat
- Paying commission when selling a property at auction
- Legal fees you might pay when selling a home at auction
- Other expenses linked to selling a flat or house at auction
- How other selling methods compare to auctions
- Selling a property at auction: Frequently asked questions
The steps involved with auctioning your house or flat
Buyers often find auctions an attractive way to find properties because they believe they might be able to get them at a discounted, bargain price compared to purchasing them through other ways, as Propertymark notes.
The process of selling a home at an auction is fairly straightforward, and does not involve too many steps. People can place bids of ever-increasing value on your home, and the highest bid at the time that the auction ends is the winner and the person buying the property.
Usually, an auctioneer will advertise your house or flat by creating a listing that describes the home and includes photographs of the exterior and interior, and this is then promoted on the auctioneer’s website and elsewhere to create interest ahead of the auction happening.
Sometimes you may need to agree to viewings where bidders get to tour your property before the auction takes place, to decide whether they will want to bid on it during the auction itself.
It is not the quickest way possible to sell a home because it can take at least several months and it also involves a lot of waiting, including several weeks or more between the day on which you decide to sell you property this way and the day on which the auction takes place. And even if your home sells, the buyer then has an average of 28 days to complete all of their required tasks to finalise their purchase, such as signing the relevant legal documents.
Some auctioneers could be open to setting a shorter deadline than 28 days for the buyer to complete these steps, but others might give them even more time than that, which in turn would extend your overall selling timeline further. That’s not a great outcome for those homeowners who are seeking to find a buyer as quickly as possible for their property.
Some auctioneers might ask you to choose between using the traditional method of auctioning your home and the modern method, so it’s useful to know what they are.
Traditional method: With this approach, the auctioneer will advertise your home for sale for many weeks or months, ahead of the auction taking place on a set date. Then on the day of the auction, people will be able to place bids on your property for a limited amount of time. When the auctioneer bangs their gavel, the top bid at that time is deemed the auction winner.
Modern method: This differs from the traditional method in that your property will be listed for sale for a set amount of weeks or months, and during that time anyone can place a bid on the home 24 hours a day, seven days a week. At the moment your listing expires, the highest value bid at that exact time will be named as the winner of the auction and person buying your home.
Whichever method of auction you might choose, planning for the costs associated with selling this way is a vital part of the process – particularly if you are looking to keep your expenses as minimal as possible.
Failing to sufficiently account for the costs of selling this way can create the risk of only breaking even by selling at a price close to what you paid for the home, or even selling at a loss.
Paying commission when selling a property at auction
Perhaps the biggest cost that you will have to pay when selling your property at an auction is commission. This is a fee that the auctioneer charges for the work that they do in advertising your property, hosting the auction, and overseeing the completion of a successful sale.
As a general guideline, you can expect to pay commission at about 2.5 percent of your property’s final auction sale price, and this fee will be taken out of the final proceeds.
But it’s important to know the cost of using the modern method of auctioning a home can sometimes be higher than selling via the traditional method, as the website Home Selling Expert says.
Whilst the standard commission for a traditional auction is about 2.5 percent of a home’s sale price, it could be as high as 4 percent with a modern auction with certain companies. The higher the percentage, the more the auctioneer will deduct from your auction sale proceeds.
If you are concerned about the rate of commission being too high when selling through an auction then you have some options for trying to lower this overall expense.
One such option is to ask the auctioneer to reduce their rate of commission, which would in turn lower the amount that they would deduct from the final auction sale proceeds. But auctioneers are under no obligation to accept such a request, so this is not a guaranteed solution.
Another approach you could try is to ask whether the auctioneer is open to making the winning top bidder on your property pay a share of your expenses, as this would reduce the amount of money that you owe the auctioneer – but they are not required to accept this suggestion.
For those homeowners who want to avoid paying commission entirely when selling, there are other options instead of auctioning that can achieve your goal. One such alternative would be selling your home to a quick buyer like LDN Properties, as these companies making competitive and swift offers to purchase practically any type of flat or house, and will never charge you and fees.
Legal fees you might pay when selling a home at auction
In addition to paying commission on the sale of your property at an auction, there might also be some expensive legal fees that you’ll have to consider as part of your overall budget.
The legal costs associated with selling a house or flat at an auction can be significant, particularly for those homeowners who are trying to find a buyer without spending much money. The website Hammered says that the cost for these legal expenses can range from around £500 to £1,500, as the website Hammered explains, but it could easily be even more expensive.
These fees that you will have to pay your solicitor should be part of your cost calculations before you make a final decision on whether to sell your home through an auction.
If you do not already have a legal representative chosen then one way to reduce your expenses here can be to get in touch with several solicitors’ offices to find competing rates and choose the lowest one, as the HomeOwners Alliance suggests.
Other expenses linked to selling a flat or house at auction
Should you opt for selling your home through an auction, not only will you have to pay the auctioneer their commission if they succeed in getting a buyer for your property, as well as potential legal costs, but there are additional expenses that you need to consider.
Some of these other costs will apply regardless of the strategy that you use for selling your home. But it can be helpful to read about them in advance because these costs, when combined with the commission and legal fees associated with auctioning your home, could make this selling choice too expensive.
- Moving expenses for transferring your belongings from the property you are selling to your next dream home, if you do not plan on doing this work yourself. You should budget several hundred pounds at least, but it can be much more for a larger property.
- Paying for a leasehold extension if you are trying to sell a leasehold flat or other residential property and you want to extend the lease before the auction. This could easily be your biggest expense, costing thousands of pounds at a minimum.
- Some buyers who plan on attending the auction might also ask for you to pay for a structural survey of your property before deciding whether they will place a bid on the home during the auction, and the cost can be anywhere from £250 to £1,000 or more.
How other selling methods compare to auctions
If the costs and other aspects of a property auction are making you reconsider whether to pursue that method for selling your home, there are a few other options. You could decide to sell your house or flat via an estate agent, to a quick home buyer or without any assistance.
All three of these alternative options differ in their costs compared to auctioning a property, so it’s worthwhile reading below about the expenses you can expect with the selections. There’s also plenty of information about other pros and cons of these choices, such as how long they might take to find a buyer on average and various other important considerations.
Selling with an estate agent
Estate agents, much like auctioneers, charge commission to sellers if they manage to find a buyer for their home. Typically, this fee is within a range from 1.15 percent to 1.40 percent of a property’s eventual sale price, and the commission is subtracted from the final sale proceeds, which will add to the overall costs that you would pay when selling via this option.
There are some estate agents that might be willing to reduce their rate of commission, so it’s always worth asking, but there are others that will charge even higher than 1.40 percent.
Much like auctioneers, estate agents charge their fee for the work that they do in finding a buyer for your house or flat. This starts with making a listing for the home and then advertising this online, in local newspapers, and in their office. They will also schedule viewings to give people the chance to see your property in person before deciding whether to make an offer. Finally, the estate agent will hear offers from buyers, with the goal of guiding one to exchanging contracts.
This process can take a very long time and you should not be surprised if you are waiting more than a full year before you manage to sell. This is far from ideal for those owners that would like to sell their property as fast as feasible, so you may want to think about other strategies, such as using a quick buyer where the entire process should only last a few short weeks.
Note also that someone can make a legitimate offer to purchase your property but then decide against it and cancel the offer, causing the sale to collapse. They are able to do this without the risk of facing any penalties so long as you have not yet exchanged contracts. And it would delay a sale for you even further because you would have to start again with seeking a buyer.
To avoid such complications, you may want to consider instead selling your home to a quick buying company like LDN Properties. You would get a number of advantages with doing so, including not having to pay any commission and also selling your flat or house within a few short weeks, making it a good fit for people looking to sell fast whilst also keeping their costs low.
Selling to a quick home buyer
Selling without any assistance
Compared to selling at an auction, selling on your own – which means with the assistance of a third party like an auctioneer or an estate agent – can have lower costs, as you will avoid paying commission. But there are other expenses involved, such as advertising the listing for your property, that you will need to pay and for which you will be solely responsible.
Selling without any help can be a very stressful choice, as you will need to handle all of the tasks involved with finding a buyer. This begins with putting together a listing, then advertising it, organising viewings, hearing offers, and ideally taking one to the exchange of contracts.
It’s far from the quickest way to sell a property and you should be prepared to wait many months, or even more than a full year, before you are able to find a buyer. If selling as fast as you can is among your top priorities then you may want to consider another selling option.
And given the large amount of work and potential stress involved with selling this way, it’s also suggested that the only people who try this approach are those that have experience with selling a property in the past, or that have a suitably qualified family member or friend that might be willing to assist with the overall selling process at no charge to the homeowner.
This approach to selling shares a similar problem to using an estate agent, given that someone can make an honest offer to buy your property but then later change their mind and rescind it. This would cause the sale to collapse, and the person that made the offer will not face any penalties so long as contracts were not yet exchanged. And it would extend your selling timeline much further because you would need to start again with trying to find a buyer.
One of the only clear benefits of selling this way is that you will not need to pay any commission to an auctioneer or an estate agent, which helps with lowering your costs. But this saving could be cancelled out by the money you’ll have to spend on advertising your listing and other steps.
As an alternative, you may want to think about selling your house or flat to a zero-commission quick buyer like LDN Properties. Not only will you get to achieve your goal of not paying any commission, but you would also enjoy a much more rapid sale, as the entire process – including exchanging contracts and paying you the full sale proceeds – will be completed within weeks.
Selling a property at auction: Frequently asked questions
Whilst LDN Properties is a quick home buyer, we do get queries from homeowners about how property auctions work, and here you can read our answers to some common questions.
Your top questions when considering the costs of selling at auction
The traditional method of auctioning a home involves your property’s listing being advertised for many weeks or months, to make people aware of the upcoming auction and get interested in possibly bidding on your home. Then the auction is hold on a set day and for a limited time people can place bids on it, until the auctioneer drops the gavel and concludes the auction.
Under the modern method of auctioning a flat or house, your listing will be considered active for the amount of weeks or months that is available, which means that people can place bids on your property 24 hours a day, seven days a week. At the precise time that your listing expires, the top bid is deemed the winner of the auction and therefore the person buying your home.
Typically, you can expect to pay about 2.5 percent of your home’s final auction sale price in commission when selling this way, and this will increase you total expenses because the fee will be subtracted immediately from the sale proceeds. Note that some auctioneers charge a higher rate of commission for the modern method of auction compared to the traditional method.
Yes, you will usually need to plan on spending at least several hundred pounds to your solicitor or other legal representative when selling at an auction. This pays for the work that they will do in putting together the various documents involved with the sale of your home, and this can easily cost between £500 and £1,500, which is not good for buyers trying to cut their costs.
Beyond paying the auctioneer their commission if they succeed in selling your house or flat, as well as potential legal costs associated with selling this way, there are a few other expenses that you might have to plan for in your property selling budget. These include the cost of moving from your home, possibly having to pay for buyer surveys, a leasehold extension and more.
If you choose to sell your home without any help then you will not have to pay any commission, which helps with reducing your expenses, but there are other costs involved. Selling with an estate agent will result in you paying commission within a range of 1.15 percent to 1.40 percent of your home’s final sale price, whereas selling to a quick buyer does not charge commission.
No, because auctioning a property can take at least several months to complete all of the steps involved. Two alternative methods – selling through an estate agent or selling without any third-party help – may take more than a year. The speediest choice is selling to a quick home buyer as this should only take a few short weeks from beginning through to the very end.
