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Auctioning your freehold or leasehold house or flat is one option when it’s time to sell your property. But before you decide on whether to use this method for finding a buyer, it’s important that you understand how auctions work, as well as their advantages and disadvantages. This guide provides all of those details, plus information on other options for selling your home.
- What is a property auction?
- The process for selling your house using an auction
- What are the costs involved with selling a home at auction?
- What is the typical timeframe for using an auction to sell a property?
- Summarising the pros and cons of the method of selling a house via auction
- Top five tips for increasing your chances of selling your home at auction
- Alternative options to auctions for selling your house or flat
- Frequently asked questions about selling property at auction
What is a property auction?
A property auction is one way to sell your freehold or leasehold house or flat, and the other two main methods are using an estate agent or selling your home to a fast buyer such as LDN Properties. There are many aspects of the process that differ from the two other methods, and in some cases, auctions can be a valid way to make a good profit from the sale of your property.
Auctioning your home can be somewhat uncertain because you will list your property for sale at a minimum reserve price, but there’s no promise that you will actually get that price. You might get no bids, you might only get the reserve price bid, or your home might get a lot of interest and you could possibly end up selling it at a price far above the reserve price.
When you auction your home, you won’t have to do much work. Instead, the auctioneer will know how to advertise your property to potential buyers in the time leading up to the auction taking place. Then they will host the auction itself, and for conventional auctions they will take bids on a home before lowering the gavel at some point when it appears there are no more bids coming – this is when your house or flat will either be deemed to have sold or not.
Note that if you receive any qualifying bids on your property then this is considered to be a legally binding agreement to purchase your home that either you or the buyer can enforce. That kind of certainty can be enticing for some owners when deciding how to sell their property.
The process for selling your house using an auction
What are the costs involved with selling a home at auction?
When you sell your home using an auction, there will be costs involved that you’ll have to account for in your budgeting for the sale. It’s important to fully understand these costs so that you can get a relatively accurate idea of how much money you might be able to make from selling your property via an auction, after you have subtracted the mandatory expenses.
Auctioneer’s fees are the most obvious upfront costs that you will have to pay when selling using an auction. You will be charged to pay for the work that the auction performs when they create a listing to advertise your home, as well as for organising and holding the auction itself. Some auction houses also charge extra fees on top for a successfully completed sale in addition to the auction commission.
Whenever you contact an auction company about selling your property, you must always ask them to disclose the fees that they charge sellers so that you know what they are before you make the crucial decision on whether or not to list your property for sale at an auction.
Solicitor’s fees are another important aspect of the process of selling your flat or house through an auction. You need a solicitor to put together a legal pack for your home so that prospective buyers are able to browse this before deciding whether they’ll want to bid on your home at the auction. The information contained within a legal pack includes lease details if applicable, the title plan, property information forms and any other specifics that someone might need to know before placing a bid at the auction. Costs for producing legal packs vary from one solicitor to another, so always ask a specific solicitor for their fees, but expect to pay typically between £350 and £500 for a legal pack.
There will be further solicitor’s fees to pay in the event that your home successfully sells at an auction. This cost is to cover the effort that your designated solicitor will undertake in performing the conveyancing work necessary to complete the sale of your property to the winning high bidder. These fees can often range from £450 to £750 plus VAT, although the exact price will depend on which solicitor you use, as well as the final sale price for your house or flat.
Note that some auctioneers will let buyers make additional charges to the winning high bidder through the use of special conditions of sale, so ask the auction company whether this might be a possibility. If you can do this it may boost your profit from selling because you may be able to offset some of your auction related costs incurred.
Also, if your home fails to sell at the auction then many auctioneers will still charge you fees to cover the costs of their work and advertising your property. If you are deterred from wanting to use an auction because of the costs, you might want to consider selling your home to a fast house buyer like LDN Properties because they never charge homeowners any fees.
What is the typical timeframe for using an auction to sell a property?
Before you can get to the auction day itself, your property will have to be listed and advertised so that potential buyers are aware of the lot before the sale takes place. You can generally expect auctioneers to require a period of a few weeks between the date on which you list your house or flat for sale at an auction and the day on which the auction takes place.
As described above, many auction houses have set a deadline of 28 days for a winning high bidder on a property to complete all aspects of the buying process, and that includes signing all the required legal documents, exchanging contracts, and every other mandatory step. This is a relatively speedy timeline and can be beneficial to those homeowners hoping to sell in a hurry.
Some auctioneers require buyers to finalise the purchase of properties in even less time, such as 20 days, whereas others might provide more time such an extra month or more. You should always check with specific auction houses to find out their standard policies on completing sales.
Taking all these steps together, you can typically expect the process of selling your home through an auction to take anywhere from six to 10 weeks, or possibly more or less time.
Summarising the pros and cons of the method of selling a house via auction
Pros of the method of selling a home via auction
Cons of selling a home via auction
Top five tips for increasing your chances of selling your home at auction
Much like with selling your home through an estate agent, there are certain steps that you can take before an auction occurs that might make your home more enticing to potential buyers – a read through the UK Government home selling advice may be useful. Some of the steps do not require you to spend much time or money, whereas others could include some costs and also delay the date on which you’re able to sell your home. You’ll have to assess whether the tips are viable for your individual needs with your property sale.
Do some advance research about auction houses in your area
It’s vital that when you are thinking about selling your home via auction that you spend some time doing online research about auction houses, as well as contacting specific companies to ask them more details about their process for hosting auctions. Look up the name of auction houses on the internet, because this can reveal whether they have any negative news articles or bad customer reviews written about them that might alert you to potential problems. And quizzing auctioneers about how they will sell your home will help to give insight into how hard they’ll work to find a buyer for your property.
Make sure the exterior of your home is in good condition
A simple and cost-free or at least very low-cost option for making your home more attractive to potential auction bidders is spending some time to ensure that the outside of the property looks as good as possible. This means mowing the lawn, removing any weeds from the garden, giving a fresh coat of paint to window ledges and the front door, replacing any broken roof tiles, and other steps that improve the overall appearance of the home. First impressions are important when selling a property, and the better condition that your home’s exterior looks, the more attention buyers are likely to give it.
Consider fixing any negative issues about your property
If you have problems at your home, whether large or small, spending time and money to fix them before attempting to auction the property can make a major difference in the final sale price you might get for it. Tending to negative issues with a house or flat ahead of trying to find a buyer for it could increase the overall value of the property. For example, if your home has damp but you pay to treat it, this could increase the minimum reserve price that you can reasonably set when you list your home for sale at an auction. However, not every homeowner has either the funds or the time to take for such work before selling their property, so whether you can use this tip will depend on your own circumstances.
Confirm with the auction house what fees and other charges you’ll have to pay
Some auctioneers might charge upfront costs or require the payment of non-refundable deposits from either bidders or sellers or both. And one auction house might have an entirely different rate of commission than another company. It’s important that you ask each auctioneer you’re talking with for a full list of their expenses, so that you know everything you might be expected to pay during the auction process. This will help you to budget the potential sale of your house or flat much more accurately.
Know what penalties you might have to pay if you withdraw from the auction
It’s possible that after you have listed your home for sale through an auction but before the actual day of the auction arrives, you might want to no longer proceed with the sale. Perhaps you have received an offer through another method, or you might even want to delay the sale of your home. Whatever the reason, it’s important that you understand you might have to pay penalty costs to the auctioneer. Ask specific auction houses in advance what their policies and charges are for withdrawing from an auction.
Alternative options to auctions for selling your house or flat
After reviewing all of the above information about using an auction to sell your home, you might decide that it’s not the best option for your specific situation. If that’s the case then you still have at least two other choices for trying to find a buyer for your property – you can either contact an estate agent to sell your home, or you could get in touch with a fast home buying company.
Contacting an estate agent to sell your home
Instead of using an auctioneer, you might consider contacting an estate agent to sell your house or flat. One of the main benefits of selling your home this way is that the estate agent will handle most of the hard work involved with finding a buyer for the property. They will create a listing for your home that features photographs designed to show off the inside and outside at their best, as well as providing key details such as the size, number of rooms, and asking price. They’ll then advertise this listing in their office, online, in local newspapers and elsewhere.
If someone expresses interest in potentially buying your home, the estate agent will then arrange for a viewing, where the buyer can come to the property to tour it before deciding whether to make a formal offer to purchase it. Some homeowners find these to be time-consuming and inconvenient, which can be a drawback of using this selling method.
A potential complication with selling your home via an estate agent is that they might not know how to sell your property if it has certain unusual characteristics or negative attributes, ranging from subsidence through to being located on a noisy street. If the estate agent has never tried to sell your type of home before, they might not know the best ways to generate interest from prospective buyers and it could be a long time before your home sells. Ask any estate agent that you’re interested in working with for their history of selling properties like yours. If they have never sold such a home before, you might want to consider finding another way to get a buyer.
Also, when you sell your property to an estate agent you will have to pay them commission for the hard work that have done in listing your home, hosting viewings, and finding a buyer. You can expect to pay a commission usually based as a percentage of your home’s final sale price, although this rate can be more with some properties and estate agents.
Also on the issue of your sale price, some estate agents will entice you to work with them by quoting you a generous projected value for your home – even though they truly know that in order to sell the property, the price will be lower than what they’re quoting you. They do this because they want to get your business and hope that such an optimistic price will secure the deal. To avoid being led astray, you should ask several estate agents for their quotes of how much they think they can sell your home, and look at the average across those prices.
And yet another negative aspect of selling using an estate agent is the amount of time it can take to find a buyer. Although some homes sell within days of weeks of going on the market, many other homeowners have to wait for several months or even more than a year to find a buyer. That’s far from ideal if your top goal when selling is to find a buyer as fast as you can.
Getting in touch with a fast home buying company
Another way that you might be able to find a buyer for your house or flat is to contact a fast property buying company such as LDN Properties. They are experts making quick and competitive offers to buy all shapes and sizes of homes, without charging any fees.
LDN Properties, for example, has been buying flats and houses throughout London since 2003 and offers a straightforward, hassle-free and no-stress alternative for selling your home.
To start with selling your home this way, contact the fast buyer and within the first hour of talking they should be able to give you an initial offer for purchasing your property. There’s no pressure to decide immediately as you’ll typically have at least seven days to consider the offer. If you want to accept the offer, the next step will be for a representative of the company to visit your property to assess the exterior and interior before making a final offer. And the final step is when the fast buyer works with your solicitor to complete all of the necessary paperwork for purchasing your home, and the entire process should only take a handful of weeks at most.
One of the major advantages of selling your house or flat to a quick buyer is that the reputable companies will never make you pay any commission or other fees. That means you will get to receive all of the proceeds from whatever final sale price the company might offer for buying your home.
And fast home buying companies are also able to consider making offers on a huge variety of freehold and leasehold properties, regardless of their type or condition. So even if you own a dilapidated home, a property that doesn’t have planning permission, a house with damp, or many other different types of situations, a fast buyer might be able to make an offer on it.
A further benefit of using a fast home buyer is that you can get peace of mind about whether the company that you’re talking with is reputable. That’s because the trustworthy quick buyers, like LDN Properties, tend to be registered with The Property Ombudsman (TPO). This is an independent organisation that publishes regulations that all members must follow to protect homeowners against fraud in the fast property buying industry.
It’s simple to find out whether a company is registered with TPO, simply visit the entity’s website and then click on the tab on the main page marked “Find a member” and type in the name of a specific fast property buying company. If they are registered, you will be taken to a page with their full membership details. If they are not registered with TPO, you should be wary about selling your home to them because it’s possible that you’re dealing with a fraudulent business.
Frequently asked questions about selling at auction
Your questions answered when selling a house at auction
When you sell your home using an auction, you will be expected to pay commission to the auctioneer. This covers their costs in marketing your property listing and also for hosting the actual auction. However, you should check to see whether you can pass some of the charges to the winning bidder using special conditions of sale.
The exact timeline can vary, but most auction houses require that if someone successfully buys your property through an auction then they must finalise the entire purchase process within 28 days. But you should always check with specific auctioneers to ask what deadline they set, because some companies give buyers more or less time to complete buying a home.
The answer depends on which auction company you are trying to use for selling your property. Some specialise only in selling residential houses and flats, whilst others only sell commercial properties such as pubs and hotels. Do some research online to find out whether specific auction companies have experience with selling the type of property that you want to sell.
If you list your house or flat for sale at an auction and nobody places a qualifying bid to buy it, the home will be deemed to have not sold. If that happens, you’ll have to decide whether to enter the property into the same auction again, try another auction, or use another method for selling the property. The good news is that even if your home receives just one bid, that’s an enforceable agreement to purchase the property.
Spend some time researching auction houses online, because this will help to alert you to any negative news stories or reviews from past customers that might highlight concerns about specific companies. You should also call around several auctioneers rather than picking the first one you talk to, and use all of this information for a more-informed decision about selling.
Instead of using an auction to sell your home, you might want to consider asking an estate agent to find a buyer for your property. However, this can be a lengthy process and you will also have to pay the estate agent commission. Another alternative is selling your home to a quick property buyer like LDN Properties, which can be completed often within weeks and you won’t have to pay any fees.
No. Auctioneers and estate agents will make you pay commission for their efforts to find a buyer for your property, and you’ll have to subtract these fees from the net profit that you can predict to make from selling your home. However, fast buyers such as LDN Properties will never charge you fees for buying a house or flat, which means you will get to keep all of the sale proceeds.
