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There are several options available to homeowners when trying to decide how to sell their freehold or leasehold properties, and trying your luck with an auction is one of these strategies. In the following guide you will be able to learn all about how to sell a home at an auction, including the pros and cons of the process, as well as details on three alternative methods.
- The process of selling your property at an auction
- Deciding on the auction reserve price for your home
- How long will it take to sell your house or flat at an auction?
- Costs involved with using an auction to sell your home
- Pros and cons with selling a property through an auction
- Alternative methods to find a buyer for your flat or house
- Top queries and answers about selling a home at an auction
The process of selling your property at an auction
“Going, going, gone” – it’s a well-known phrase that immediately makes people think of the stereotypical auction, where after those words are spoken the auctioneer slams down their gavel and ends bidding on an item, with the top bid being the winner and buyer of it.
And in the simplest possible terms that’s exactly how property auctions work, much as you would experience selling any other valuable item like fine art, a car, collectibles and more. To find the right auctioneer you can search online and read reviews of auction houses, ask friends for recommendations and do other research to see which might be the most suitable for you.
Many properties are sold through auctions across the UK every year, and plenty of them use the traditional method, where the auctioneer will advertise a house or flat for a certain number of weeks or months ahead of the auction in order to generate interest from potential buyers. Then they will host the auction itself, with the aim of having several people bidding on the property at ever-increasing prices. The auctioneer will set a short amount of time for placing these bids before lowering their gavel, and the top bid at that moment is announced as the auction winner.
Or you might be offered the modern method of auctioning a home. With this option your listing will be advertised for a set number of weeks or months and people will be able to place bids on it 24 hours a day, seven days a week, until whatever deadline the auctioneer sets. The highest bid placed at the exact time the listing expires is then named the winner of the auction.
But there are various important nuances to learn about when you are considering using an auction to sell your leasehold or freehold house, flat or other type of residence. This guide explains those different factors, including how much the process might cost you, the amount of time it might take to get through to a completed sale, and various other pros and cons.
You will also get to read about three alternative options available to find a buyer for your home, should you ultimately decide that an auction is not the best fit for your situation.
Deciding on the auction reserve price for your home
When you choose to sell your property through an auctioneer, one of the next most important decisions that you will be required to make is deciding on a reserve price for your home.
The reserve price is the lowest price at which you agree your house or flat can sell at the auction, as noted on the website for the land and property auctioneer Clive Emson.
If you receive just a single bid at the reserve price then this is deemed to be a binding legal agreement for you to sell the home. The bidder can sue you to enforce the sale if you attempt to walk away from it after the auction is over. That’s why you must choose a reserve price that should produce at least some profit from the sale, even after paying the auctioneer their fees.
It’s vital to take time to calculate such a reserve price before making a final commitment to selling through an auction, otherwise you put yourself at the risk of only breaking even on the sale, meaning you sell at a price close to what you paid for it, or even selling at a loss.
The auctioneer will likely give you advice on the reserve price that they think will attract an opening bid, and provide input on when a price might be too high to get any bids.
But you can also do your own research to help guide your decision on a reserve price, for example by visiting property sales websites and noting the current and past sale prices of properties that are similar to yours in the same area. It’s a crucial decision that will affect the eventual profits from the auction so be sure to take your time to get this right.
How long will it take to sell your house or flat at an auction?
If you are hoping to find a buyer for your home as speedily as possible, you may want to pause before choosing an auction because it is not necessarily the best match for your needs.
Although auctions can sometimes move swiftly, as described by the HomeOwners Alliance, they are far from the quickest option available for selling a property.
That’s because there is a fair of amount of waiting involved for homeowners when selling this way, starting with a period of many weeks or months between the day on which they opt for using an auctioneer to sell their property and the day on which the auction finally takes place.
If your flat or house manages to sell at that auction, you will experience a further delay before selling because the winning bidder will have about 28 days to sign all of the required legal paperwork to complete the transaction and finish their other mandatory tasks. In total, this can mean it’s a very long time between choosing this selling method and finally selling.
To speed up the process, you could ask an individual auction house if they would be open to setting a shorter deadline for the buyer to complete their mandatory tasks. But beware that some auctioneers might give the top bidder even more than 28 days for doing this work.
If selling your house or flat as fast as feasible is your main priority then you might want to review some of the faster choices for selling, such as getting in touch with a quick home buyer like LDN Properties. These companies have the ability to finalise the purchase of most properties in just a few weeks, including that time need to exchange contracts and pay you the sale proceeds.
Costs involved with using an auction to sell your home
Commission that property auctioneers charge will often be higher than you could expect to pay when selling via an estate agent, as the website Home Selling Expert explains.
At an auction you can expect to pay about 2.5 percent of your property’s sale price in commission, compared to a range between 1.15 percent and 1.40 percent that you might typically pay when selling through an estate agent. The commission will increase your selling expenses because the fee will be deducted immediately form the eventual auction proceeds.
It’s possible that some auctioneers could charge even more than 2.5 percent, which would cost you even more in commission. Other auction houses might be open to lowering their rate of commission or having the buyer pay a share of your costs, so it’s worth asking about this.
Some other expenses that you might incur when selling via an auction include a fee that can range between £100 and £500 for the auctioneer to add your home to their listings, as well as having to pay some or all of the costs for advertising the property, which can be hundreds of pounds. You will need to budget for potentially having to pay these expenses as well.
The potential for being charged expensive commission and other costs when selling a house or flat through an auction can be enough to make some sellers want to consider alternative approaches for finding a buyer, particularly if they are trying to keep their overall selling expenses low.
Pros and cons with selling a property through an auction
The costs of selling a flat or house through an auction can be a major negative factor for many homeowners, but there are a number of both disadvantages and advantages that you could experience when deciding to use an auctioneer in order to sell your property.
It’s important to learn about the various pros and cons of auctioning a home, as detailed below, because it can guide you in deciding whether or not to use this method of selling.
Advantages of selling a home via an auction
Minimal workload: The auctioneer will take care of handling most of the tasks involved with selling your home, starting with putting together the listing and advertising it, as well as hosting the auction and overseeing the completion of a successful sale. If you want to put in minimal effort when seeking a buyer for your property, using an auction can be a good choice.
Competitive bidding: If your house or flat is in high demand among the various people taking part in the auction, this could lead to a situation where several buyers try to outbid each other by placing bids of increasing value on your home. This competitive bidding might push the final sale price of your property very high, resulting in a decent profit from the sale for you.
Fixed schedule: Property auctions take place on a specific date if they are done using the traditional method, or they have a fixed end date if you opt for the modern method. Either way, when you enter your home for an auction then you will be given a specific date for when it might sell, and this kind of certainty can be a welcome factor for many owners looking to sell.
Disadvantages of selling a home via an auction
Property viewings: You might have to agree to viewings where people interested in your home get to visit the interior and exterior before the auction, as the website Hammered notes. Some sellers find viewings to be very disruptive and inconvenient to their lives.
Expensive fees: As outlined in more detail in the previous section of this guide, an auctioneer will require that you pay them commission of about 2.5 percent of your property’s sale price if they are able to successfully get a buyer for it at the auction. This cost will be subtracted right away from the sale proceeds, which will increase your overall selling expenses.
Uncertain outcome: There is no guarantee that your property will sell at the auction, and if your reserve price is too high or there is some prominent flaw with your house or flat then you might end up in a situation where nobody bids on the home. This will mean that it remains unsold and you will need to start again with searching for a buyer, delaying a sale even further.
Alternative methods to find a buyer for your flat or house
If you have read the above pros and cons of auctioning a home and decided that it might not be the best fit for your selling situation, the next section of this guide outlines three alternative strategies.
Instead of using an auction to sell your home, you could enlist the help of an estate agent, try to sell without any third-party help or sell to a legitimate quick buyer such as LDN Properties.
As with an auction there are pros and cons of all three of the other methods based on factors like how long they take, their costs and more. Browse the details of all three options below and then compare them against your top aims with selling – such as how fast you want to sell, your ideal sale price and whether you are open to paying fees – to find the most suitable alternative.
Selling with an estate agent
Estate agents put in most of the work needed to sell a home, as they produce the listing, advertise it in their office, online and in local newspapers, then schedule viewings and hear offers from interested buyers, with the goal of taking one to the exchange of contracts.
This can be a fairly slow way to sell any type of home and you should be prepared for it taking more than a year in certain cases. Remember also that someone can make an honest offer to buy your property but then change their mind and cancel the offer, making the sale collapse, which they can do without any penalties if contracts are not yet exchanged. It would also extend your selling schedule because you would have to begin again with seeking a buyer.
If an estate agent succeeds in selling your home, you will also have to pay them commission and this will be subtracted from the eventual sale proceeds, which will add to your expenses. The typical estate agent charges commission within a range of 1.15 percent to 1.40 percent of a home’s eventual sale price, although the exact amount might be higher or lower than this.
Selling without any third-party help
If you want to prevent paying any commission when selling your home then you could consider selling without any assistance from a fee-charging estate agent or auctioneer. That way you would avoid commission entirely, which should help with reducing your selling costs.
But you might find that this initial saving you make by selling solo is wiped out by the funds you will need to spend on advertising your listing and other steps needed to sell your home.
You would also be responsible for handling every steps of the selling process, beginning with creating a listing for your house or flat and advertising it, then scheduling viewings for anyone interested in your home, followed by hearing offers and trying to get one to a final sale. This is an incredibly long and stressful process that might take more than a full year to find a buyer.
And this method of selling has the same problem of using an estate agent in that someone could make a legitimate offer to purchase your property but then their circumstances change and they have to rescind the offer. This will cause the sale of your home to fall apart but the person that withdrew the offer won’t face any penalties if contracts are not yet exchanged. You will have to start over with seeking a buyer, delaying the sale of your home even longer.
That’s why this approach to selling a property is usually only recommended for those owners who have previously managed to sell a similar home, or who have a qualified family member or friend that is open to helping them at no charge with the steps involved with selling the property.
Selling to a quick home buyer
Finally, you could think about contacting a quick home buyer like LDN Properties to sell your home. These companies are known as quick buyers as they can typically finalise the purchase of a house or flat within just a few short weeks, and that includes the crucial steps of exchanging contracts and paying you the full sale proceeds, making it by far often the most rapid choice.
They are able to move so speedily because they already have the financial resources to afford buying your property, compared to individuals and other types of buyers that might first need to wait weeks or months to get approval for a mortgage in order to purchase your home.
These companies also make fast and fair offers to purchase any home no matter its age, condition, location, shape, size or type – even if it has a major flaw discouraging other buyers, such as structural damage to the building that you are unable to fix before seeking a buyer.
For example, LDN Properties launched in 2003 and since that time it has purchased and made offers for a wide range of homes across the UK that includes Peabody properties, houses near an airport or underneath a noisy airport flight path, flats that have cladding, homes with septic tanks, properties that are near to an industrial estate, flats located above commercial premises, houses that have lapsed planning permission, dilapidated properties in need of repair, flats in properties with an absent freeholder, homes where the owner has council tax arrears, and many other varied examples.
Also, honest quick buyers will never make owners pay any commission when purchasing their properties, which means that you can count on receiving the complete sale proceeds. That compares favourably to using either an auctioneer or an estate agent to sell your home because they will charge you commission if they find a buyer, and that will be subtracted from the eventual sale proceeds, which will result in overall increased costs for selling your property.
Top queries and answers about selling a home at an auction
Although LDN Properties is a quick home buyer, sellers still often ask us questions about home auctions and here we are providing our answers to some of those frequent queries.
Your top questions when selling a home at auction
The auctioneer will create a listing for your property that describes it and features photographs of it, and you might have to agree to viewings where people interested in the home get to tour the inside and outside. Next, the auctioneer will host the actual auction and, if your house or flat sells, they will also oversee the final steps necessary to formally complete the transaction.
The auctioneer will work with you to select a reasonable reserve price but you check property sales websites and other sources to see how much homes like yours are currently selling for. Make sure that when you set your reserve price you do it at a value that should still generate some profit for you from the sale, even after you have paid the auctioneer their commission.
Expect it to take several months at least to sell your home through an auction, starting with a long wait of many weeks or more between when you choose this selling method and when the auction happens. Should your home sell at the auction, the buyer will then have a further 28 days to finish their tasks to complete the purchase, such as signing various legal documents.
Yes, auctioneers will charge you commission if they are able to sell your house or flat. The typical rate is 2.5 percent of a property’s final auction sale price, and this will be immediately deducted from the sale proceeds, which will add to your expenses. If you want to keep your costs low when selling your home then you may want to consider other ways to find a buyer.
If you are not sure about selling your house or flat through an auction then you might want to consider three alternative approaches – you could enlist the help of an estate agent that will handle most of the tasks involved with finding a buyer, you may attempt to sell without any help and do all this work yourself, or you could sell to a quick home buyer such as LDN Properties.
Contacting a quick buyer is the swiftest of the three other strategies for selling your flat or house because the entire process should only take a handful of weeks, and this covers the time needed for exchanging contracts and paying you the proceeds. If you choose to sell without any assistance or sell via an estate agent then it could be a year before you find a serious buyer.
Selling with an estate agent is another method those does charge commission, typically between 1.15 percent and 1.40 percent of a property’s final sale price and this is deducted immediately from the sale proceeds. But the options of selling your home to a no-fee quick buyer like LDN Properties or selling on your own are two ways to avoid paying commission.
