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How to sell a house at auction

Auctioning your house isn’t the last resort. Auctions help properties sell in a matter of minutes, lets you control the minimum sale price, and you know that you have a captive audience of genuine buyers.

Auctions are an increasingly popular way to buy and sell property, and over 80% of properties listed for auction are sold on the day.

Why sell at auction?

Some properties are better suited to auctions than others.

Auctions generally attract buyers who are looking for a renovation project, so if your property is run down then it will do better at auction.

Unconventional properties also do well at auction. These kinds of properties can often be harder for estate agents to market because determining a price is difficult.

Auctions are also useful if you want a quick sale. You’ve got a captive audience of people who are interested in your property and because it’s already listed, the likelihood of you finding a buyer that day is high. The vast majority of property sells first time at auction, so you can rest assured that yours will go.

Buyers often aren’t coming into an auction blind. Your property is advertised for several weeks before the live auction, or for online auctions, buyers will have 30 days to make a bid. So you have a higher chance of attracting an interested party.

How to auction a house

Before your house makes the books, you need to decide on the type of auction you’ll enter it to. There are two different ways you can auction your property:

The modern method of auction

This is otherwise known as a conditional auction and is often online.

Buyers pay either a non-refundable reservation fee or a deposit to secure the property after a successful bid. This is paid straight away and is usually a percentage of the sale price or a fixed minimum value, whichever is higher.

They then have 56 days to complete the transaction, and contracts are exchanged within 28 days of the buyer’s solicitor receiving the draft contract. This gives the buyer time to arrange finances, ensuring the sale goes through.

If the sale falls through because the vendor breaches the terms and conditions, the buyer gets their money back.

Traditional auctions

Traditional auctions are the same as those that you see on TV. They’re live, in-person and fast-paced.

Buyers pay a 10% deposit of the sale price when the auction is complete and contracts are immediately exchanged. This is non-refundable unless the seller breaches the terms of the agreement. Because contracts are exchanged on the same day, buyers must have suitable finance (like a mortgage) in place when they go to the auction.

Buyers may also have to pay a separate buyer’s charge, which varies from auction house to auction house.

It’s also common practice for the seller’s legal representatives to prepare a legal pack for bidders to browse through. This usually includes the memorandum of sale, special conditions of sale, local search, Land Registry search, proof of title, and a copy of any lease affecting the property. Some estate agents offer this as a service when you engage them.

With this method, completion usually takes 28 days.

Setting your guide price

After you’ve decided which method of auction is best suited to you, it’s time to think about the guide price. This is a minimum and maximum that the property is worth and is intended to entice buyers.

You can also set a reserve price, which is the absolute minimum you are willing to accept for the property. If the bids don’t reach this threshold, then the property doesn’t sell. Buyers aren’t aware of this price when they make bids; it’s just between you and the auctioneer. The reserve price is often lower than the guide price but it guarantees that your property will sell for an amount you’re happy with.

Remember though that you will pay the estate agent a fee based on the sale price. So this may influence your decision with the guide price and establishing how much you’ll take away.

Preparing your house for auction

Your property will be advertised for a few weeks in the run-up to a live auction and will be available to browse online for a modern auction.

Before the auction, buyers might want to view your property in person too, so make sure it’s as clean and tidy as possible. Show your buyers the potential your property has and give them ideas on what they could do if they bought your property.

Attend a property auction yourself to get a feel for how it works so you know what to expect on the day.

What happens if a property doesn’t sell at auction?

If your property doesn’t sell at auction, it’s withdrawn from sale. There are a couple of options available to you.

Bidders can approach the auctioneer and give their best offer, giving you the chance to salvage the sale. If this is above the reserve price, but below the guide price, the property can be sold in normal auction circumstances. If it’s below the reserve, the auctioneer will put forward the offer for you to consider.

As a seller, the only costs you’ll incur for a failed sale is the entry cost, any fees paid for preparing your legal documents, if you had those created.

Get in touch with Hunters auctions

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