Selling At A Property Auction
David Sandeman (Managing Director) gives expert video advice on: Why should I sell at auction?; What should I look for when choosing an auction house?; What should I expect my auctioneer to do? and more...
Why should I sell at auction?
There are several benefits of selling a property at auction. One of the main benefits for selling at auction is speed. Within eight weeks of deciding to sell a property, you could have the money if you go down the auction route. The second benefit to selling at auction is that depending on the type of property, wide exposure that the auction marketing process can bring could get several people wanting to bid on your property, and therefore drive the price up. The price may even drive up to levels which could exceed what you might have achieved with an estate agent.
Is it cheaper to sell a property at auction than through an estate agent?
The cost of selling a property either through an estate agent or auction is broadly the same. In both cases the auction house or the estate agent are going to charge you a commission. The only difference being, with an auction house you also have to pay the catalog entry fee, which may be anything from 5 pounds up to 15 pounds, depending on the size of your insert in their catalog. Some auction houses though will offer the catalog entry free of charge. But do make sure that your property is going to have suitable exposure to the wider marketplace.
What kind of property benefits from being sold at auction?
The sorts of properties which sell well at auction are generally un-modernized and in need of work. This is because a lot of developers and speculators go to the auction room to buy this sort of property. If you are looking to sell a house in perfect condition, then you may well find that it doesn't achieve its full value at auction, though you will have the benefit of a quick sale.
What should I look for when choosing an auction house?
When choosing an auction house to sell your property, do make sure that they have sufficient reach into the marketplace and circulate their catalogue amongst potential purchasers for your property. Do not choose on the basis of fees alone, as whilst an auction house might charge a higher percentage in commission, you will have a far wider reach into the potential purchasers for your property. This is really important.
What should I expect my auctioneer to do?
If you instruct an auction house to sell a property for you, the auctioneer will do several things. Firstly, he'll give you an appraisal over the phone as to what he believes the property can achieve at auction. This will be based on his knowledge of the area, and seeing what similar things have sold for at auction. If you're happy with that, he will then, or one of his staff, visit the property to carry out an inspection where they will expect to then be able to arrive at a suitable reserve price for the property. If you agree to this, the property will be entered in his next catalog and the marketing will take place. It is important to remember that the auctioneer works for the vendor - you - and he has a duty under the estate agency legislation to get the best possible price for you.
How long should selling my house at auction take?
Once your property is in an auction catalogue and has been published, there is generally about three weeks between that date and when the auction takes place. If your property sells on the day, completion is generally four weeks after that. So, we're looking at seven weeks, really, from when the catalogue comes out to you receiving the sale proceeds.
How long before the auction do I need to register my property?
If you're looking to sell property at auction, I would suggest you give the auctioneer as much notice as possible of your intentions to register your property. Generally, this should be two or three weeks before the publication of the catalog, but he can, in certain circumstances, take properties up to four days before the catalog is published.
Do I still need to use a solicitor?
When selling a property at auction, it is essential to employ a solicitor to a paralegal bank. This needs to be ready by the time the catalogue comes out, enabling prospective purchasers of the property to see the property is in a good legal order and suitable for purchase.
Is it ever a good idea to accept an offer before the auction?
In certain circumstances, I would recommend you do accept offers prior to auction. This is where the offer may be well above the reserve price and is a price which you're very happy to accept. Bear in mind that you're never sure who's going to turn up on the date to bid on the property. You may end up selling it on that day for less money than you were offered prior to the auction.
What is a reserve price?
The reserve price is a minimum price for which the property can be sold. The price is fixed by agreement between the vendor and the auctioneer and only those parties know what it is before the sale.
What is a guide price?
When selling a property at auction, the guide price is an indication for prospective purchases as to whether the reserve is being set. The guide price of the property may either be a specific number or a number plus. For example, the guide price will either be one hundred thousand pounds, or one hundred ten thousand plus.
What should a vendor look out for in the conditions of sale?
When looking to instruct an auction house to sell your property you as the vendor will need to review the general conditions of sale. These are the rules by which the auction and the marketing of the property will be conducted. If you are unhappy with any of them or want to change them, this can be done in certain circumstances by way of special conditions of sale which are really a variance on the general conditions of sale.
Should I book my property into more than one auction?
When selling a property at auction, it is not recommended that you put your property into more than one auction at the same time. Spend time choosing the correct auction for your particular lot. However, if you do put your property into more than one auction, instruct the auction to sell your property at roughly the same time as each other. Bear in mind that whoever sells the property will earn their fees, and the auction house which doesn't sell it will also be entitled to their fees on the property.
What do I do if my lot doesn't sell?
If your lot doesn't sell, there's still a good chance it may well sell after the auction. The auctioneer will try and sell it for at least 30 days after the sale, by contacting people who have shown interest in the lot prior to the auction. These will be people who have requested legal documents or maybe been around to see the property. You may, however, have to revise the reserve price in a downward direction to make it more inviting to prospective purchasers.
When does the vendor get paid?
The vendor is paid on completion. This is generally 28 days after the auction date. The purchase solicitor will send funds over to the vendor's solicitor and the auctioneer will send any deposit he might be holding from the auction date to the vendor's solicitor, less his charges for auctioning the property.
How much of the purchase price does the vendor receive?
The vendor receives all the sale proceeds less what the assistant will be charging him, often around half percent, and the commission that the auctioneer's entitled to which will be anything from one to two and a half percent.