Auctions provide an interesting alternative to selling your home through an estate agent. If you’re looking for a fast sale and to avoid the pain of a fall-through, or if your home is in a state of disrepair, auctions might be worth a look. Here’s everything you need to know.
Selling your home at auction can be done in as little as two months, with the typical sale taking 6-10 weeks.
This is ideal for anybody in a rush to sell, perhaps if they need to sell in order to buy a new home without getting stuck in a chain.
Selling quickly at auction is reliant on you setting a realistic reserve price (see below) on your home.
Price and cost
Some people worry that selling at auction means they won’t get as much money for their home, but there is no reason to expect you won’t achieve the same value as you would get on the open market. In some cases, you can even get more!
If there are multiple people interested in your home, the bidding process can get competitive and the final price can be a very nice surprise! This is especially true when the bidding is taking place live in the room (rather than digitally) when people can find it difficult to let the property slip through their fingers.
You will need to give between 2-3% of the final price to the auction house. This goes on top of any marketing and advertising costs, as well as the money you’ve previously paid a solicitor to help with all of the presale legal processes. We have a full guide on choosing a good solicitor, here.
You will be given two prices before your home goes to auction, a reserve price and a guide price.
The reserve price is the minimum price your home can be sold for. You should take the auctioneer’s advice on this. This price will not be made available to the bidders, only you and the auction house, and will usually be 75-80% of the current market value.
The guide price is also set by the auctioneer. This price is made available to potential bidders to provide a rough idea of how much your home should sell for. Setting the reserve price is a fine art – a balance between achieving a good price for the seller while also tempting potential buyers with a ‘bargain’. For this reason, you should always take the auctioneer’s advice.
Selling at auction can be far more reliable than the open market: there is much less of a chance that buyers will bail on you halfway through the buying process. In the open market, this is called a fall-through and can happen for any number of reasons. At auction, however, as soon as the hammer falls, the highest bidder must put down a 10% deposit at which point they have four weeks to pay the remaining 90%.
Type and state of home
Success when selling at auction depends very much on whether your home is well-suited to this method of sale. To understand why, you only have to think about why people buy homes at auction: they often want value for money, a diamond in the rough.
As such, fixer-uppers are ideal for auction. While most buyers will demand structural integrity before placing a bid, they are often attracted to homes that need a lot of work and renovation. Such homes can perform badly on the open market so auction is the ideal environment.
If, on the other hand, your home is in perfect condition and is likely to sell for the same price it would on the open market, any investors floating around the auction room won’t be attracted because the potential profit they could get from a quick turnaround is slim to none.
We would always recommend taking the advice of the auction house as to whether or not your home will be attractive to bidders. They will know exactly what sort of thing their customers are looking for.
If you’ve bought or sold a home at auction, we would love to hear about your experience. Let us know in the comments section below. And do the same if you have any questions for our property expert, Russell Quirk – he’s more than happy to help!