What are the pros and cons of selling my home at auction?

Making the decision to sell your property at an auction

One of the most important choices that all homeowners have to make when trying to find a buyer for their house or flat is selecting which strategy to use for finding a buyer.

There are often four approaches to choose from – selling at a property auction, selling with an estate agent, selling to a quick buyer like LDN Properties, or selling without any help. All four of these options have their unique advantages and disadvantages based on how much commission, if any, they charge, how long they take on average, and other crucial factors.

For example, selling your home to a quick buyer might take just a handful of weeks, and that includes exchanging contracts and you receiving the full sale proceeds. By contrast, the three other options for selling a property could take at least several months, if not longer.

If you’re interested in the option of auctioning your home, this guide provides all the information you will need, including details about what to expect throughout the auction process and the pros and cons involved with selling this way. There’s the benefit of having the auctioneer handle all the work of finding a buyer, but selling this way can charge expensive commission.

And if you ultimately decide against wanting to sell your house or flat through an auction, this guide also provides a detailed summary of the three other approaches for selling a property, so that you can eventually find the approach that works best for your unique needs.

How a property auction works

If you want to sell your house or flat through auction, you will contact an auctioneer who will take of listing your property and trying to generate interest in it from potential buyers.

The auctioneer will market your property at an opening minimum bid that can sometimes be set at a level below your preferred sale price, with the goal of attracting more interest on sale day from buyers who hope to get a bargain purchase. The ideal result would be for many buyers to engage in competitive bidding at auction that drives the final price up significantly.

The Homeowners Alliance, an organisation that represents homeowners’ interests, has helpful information on the rights and requirements for buyers involved in auctions, and it notes that the buyer might end up paying far more than the opening guide pride.

Once the auction begins, the auctioneer will announce the property and the opening bid, and then seek bids from people in the room or who are bidding remotely. When the bids eventually stop the auctioneer will bring down their hammer – and as soon as they do this it marks the start of a legally binding commitment by the winning bidder to buy your home.

After the auction is over, both the seller and buyer will exchange the necessary legal paperwork to complete the sale. You’ll set a date for the payment, which is typically 28 days after the auction, and once the contracts are signed and funds paid, your house is sold.

Benefits of selling your home through auction

There are a few benefits of selling your house or flat at auction, including the fact that the auctioneer will handle all the potentially stressful and time-consuming aspects of selling such as listing and marketing your home. If you’re looking for a straightforward way to sell that doesn’t require you to do much work, this could be a good choice.

Auctioning also has the potential for getting you a much higher sale price than you might have expected. This can happen when your house or flat is very attractive to many bidders and they engage in competitive bidding that drives the final sale price up.

And another benefit is that auctions always happen on a schedule, so you’ll know that auction day is the exact day your home will sell. This can be a great choice for selling your home in the event that you need to find a buyer for your house or flat in a hurry.

Cons of selling your home through auction

There are a number of negative aspects of auctioning your home for sale, including the fact that you will have to pay the auctioneer fees for handling the sale on your behalf. If you are hoping to make the most money possible from selling your house or flat, auctioning might not be a good choice because you’ll have to deduct the auctioneers’ fees from your final sale price.

Typically, an auctioneer will charge this commission at 2.5 percent of a property’s final sale price, and the fee will immediately be taken out of the sale proceeds. It’s possible that you could negotiate a lower fee with an auctioneer, or have them charge the winning bidder a share of your costs, but this is not guaranteed – and some auctioneers may charge even more than 2.5 percent, which would inevitably mean even higher total expenses when selling this way.

Another negative aspect of auctioning your property is that you are not guaranteed to make more than the opening minimum bid. These are usually set at price levels perhaps lower than you’d like to get for your home, in order to generate interest in the property. But if you only receive the low starting bid that might be less money than you might need from the sale, so if financial concerns are your main reason for selling, you might not want to try an auction.

And although property auctions do have the benefit of proceeding on a set schedule, this doesn’t mean that they’re always a swift way to sell a house or flat. There is a lot of waiting involved, starting with several weeks or even months between the day that you choose to sell using this method and the day that the auction takes place. If your home doesn’t sell at the auction, you’d then have to begin again with seeking a buyer, delaying a sale much longer.

If your property does sell at the auction, the winning bidder then typically has about 28 days to sign all of the mandatory legal documents and complete the other work necessary to finalise the purchase, extending the timeline even further. You could ask an auctioneer if they’re open to shortening the deadline, but note that some give buyers even more time than 28 days.

Alternatives to a property auction for selling your home

After reading through the pros and cons of selling a property through an auction, you might have concluded that you’re no longer interested in using this approach. That leaves you with the choices of selling via an estate agent, selling to a quick buyer, or selling without any help.

Just as property auctions have their strengths and weaknesses, the same is true for these three other methods in terms of whether they will require that you pay commission, how long they might take, and additional factors. Selling to a quick buyer, for example, means you can avoid getting stuck in a property sale chain – a problem that can occur with the two other options.

It can help to review the information about the three alternative selling choices below and then compare those details against your main priorities with selling, such as your preferred sale price, how fast you want to secure a buyer, and whether you can accept paying any fees. Doing this should help with highlighting which of the approaches best suits your situation.

Selling via an estate agent

Estate agents do all of the main tasks of selling a home, starting with crafting a listing and advertising it in their office, in local newspapers, and online, then scheduling viewings for people to visit the property, and finally hearing offers, with the ultimate goal of converting a legitimate offer to the final exchange of contracts. Although this can reduce your workload and stress when selling, remember that an estate agent will charge you commission if they sell your home.

The fees that an estate agent charges a seller represent a “significant” portion of typical moving costs when selling this way, as Sotheby’s International Realty website notes. This commission is often charged anywhere from 1.15 percent to 1.40 percent of a home’s sale price and it will increase your expenses because it will be subtracted from the sale proceeds right away. And some estate agents may charge their commission at rates even higher than 1.40 percent, which would further increase your overall costs with selling.

Another downside of selling a house or flat through an estate agent is that it can be a very lengthy process, possibly taking several months or even more than a full year. If one of your top goals with selling is to find a buyer as quick as feasible, consider selling to LDN Properties or another quick buyer as the entire timeline from start to end should be just a few weeks.

When you sell your home using this option, look out for a sneaky trick that some estate agents use of quoting you an attractively high sale price for your property despite them secretly knowing that it will only get serious offers at a much lower value. They do this so that you use their services, so they will profit from charging you commission if they eventually sell the home.

It’s free, fast and simple to avoid falling for this trick – start by asking many estate agents to give you a no-cost, zero-obligation sale price quote from your home. Next, visit property sales websites such as Rightmove and Zoopla and write down the current and past sale prices of homes similar to yours. Finally, calculate the average of all the prices that you have gathered and the result should be a much more reliable rough estimate of your home’s potential value.

Selling to a quick buyer

Quick buyers, like LDN Properties, are so-called because they have the financial resources available to purchase practically any leasehold or freehold home right away. They do not need to wait to first get approval for a mortgage to afford the purchase, which cuts the process down to a few weeks, and this includes exchanging contracts any paying the seller the full proceeds.

This makes selling to a quick buyer a streamlined, hassle-free and also zero-commission way to sell a home. These companies will never charge you any fees when buying your property, which helps with lowering your selling costs, so if that is an important priority for you when selling then a quick buyer can be a good choice. They compare favourably to selling through an auction or an estate agent, as those two methods charge commission that will add to your costs.

Quick buyers can also be the best option if you are trying to sell a house or flat that others might view as a “problem” property whose faults make them lose interest in purchasing it. That’s because these businesses are renowned for making fair and swift offers to buy homes no matter their age, condition, location, shape, size or type, and even if they have financial issues like ground rent arrears, legal complications such as disputes with neighbours, and more.

LDN Properties, for example, launched more than 20 years ago and since that time it has made a long and varied list of purchases throughout the UK that includes mews houses, properties with a mansard roof, homes located on a private road, flats without a lift in the building, houses that do not have a completion certificate, properties with a septic tank, homes located close to a railway station or lines, flats with dry rot, and many other different scenarios.

If you’re interested in selling to a quick buyer, it’s a simple process that starts when you call them about selling your property. Within one hour of talking they should be able to make a tentative offer to buy your home, and you will have at least a full week to consider it.

Should you accept that initial offer, the next step will be for a representative from the quick buyer to visit your property so that they can inspect the interior and exterior in person ahead of making a final offer. This is the only viewing that you would need to have when selling through this approach, compared to possibly dozens or more viewings when selling via other methods.

And the last step, if you accept the final offer, is when the quick buyer works rapidly with your solicitor or other legal representative to complete all of the mandatory legal documents and other steps needed to finish the sale – all within weeks of you first contacting the quick buyer.

Selling without any help

Yet another way to sell a property is without any assistance, which means that you have to take care of each step in the selling process. You will first have to create a listing and then advertise it, then arrange viewings to give anyone interested in your home the chance to see it in person, followed by hearing offers and trying to get one to the eventual exchange of contracts.

Unless you have previously managed to sell a home before, or if you have a suitably qualified family member or friend willing to assist with the sale at no cost, this can become a very lengthy and stressful approach to selling a property. It’s not something you can just do in your spare time, so you should be prepared for the large amount of effort that it would require.

Another disadvantage of selling on your own is that it could take many months or even longer to sell. Even if someone makes a genuine offer on your house or flat, they could later change their mind and rescind it, which they can do without penalty if contracts are not yet exchanged. This would delay a sale even longer as you would have to start over with searching for a buyer.

But one advantage of selling without any assistance is that you will avoid having to pay an estate agent or auctioneer any commission once you sell the property, which reduces your costs. Yet you could find that the saving you make as a result is eliminated by the money that you will need to spend on the various selling tasks such as promoting your listing.

Instead, you could think about selling to a no-commission quick buyer like LDN Properties, as this would result in the same benefit of not having to pay any fees on the sale of your home but with the extra plus of completing the entire sale – including the exchange of contracts and receiving the full sale proceeds – all within a handful of weeks.