Selling your property via an auction site is a much more mainstream option than it has been in the past and could be a great way of achieving a good price and a quick sale.
Not everyone homeowner knows how to sell a property at auction and there is still an element of mystique or uncertainty about the process for some people. Here is a look at what is involved in order to sell your home at an auction and what some of the pros and cons are that you should be aware of.
Reasons for selling at an auction
You need to ask yourself a few pertinent questions before considering whether the auction process is suitable for selling your property.
If you have a house that is need of updating and requires a certain amount of maintenance and repairs carried out to bring it up to a reasonable standard, it would definitely make it a good candidate for an auction.
It is common knowledge that property investors and DIY enthusiasts who want a project that can offer them some uplift in the price after they have done some work on a property, tend to scour the auction lists to find a house that could turn them a profit.
Another common theme for the sort of property you might find being sold at an auction, is when a particular house or flat is not exactly conventional or has some unusual circumstances surrounding it. There may be legal complications with covenants or maybe the property is not mortgageable in its current state.
Any type of property
It would be wrong to think that the only properties you will find at an auction are either in need of work, have legal issues or have been repossessed by the lender. The auction process offers any seller the opportunity for a quick and uncomplicated sale where there is certainty that once it has gone under the hammer, the sale will go through.
It is notoriously difficult getting a sale to go through within a relatively short time span when you go through the conventional estate agent route, so the auction process can offer an edge if you need to sell in a hurry for whatever reason.
There are always pros and cons to most things and there are certainly some negative aspects about property auctions that you have to take into consideration when deciding if it is right for you.
Buyers do tend to expect a bargain rate for most properties that find themselves in the saleroom, so you should set a reserve that is the bare minimum amount you are prepared to sell your property for.
If you have a fairly typical house in a reasonable location, you may not always beat the price you could get by selling through an estate agent, unless you get two buyers bidding against each other, which will help the price climb to a reasonable level.
As with any method of selling, auctions are not free and you will have to pay a commission on the sale which is likely to be somewhere around 2-2.5% of the sale price.
You should also bear in mind that public viewings are fairly common with auction listings, so you need to be prepared to allow any potential buyers or surveyor’s good access to your property beforehand. This can be a bit more tiresome than controlled viewings at a regular interval through an estate agent.
Another point to remember is that you will have to appoint a solicitor to be present at the auction, in order to handle any last minute queries or legal technicalities as well as subsequently liaising with the purchaser.
Deciding the best option
Even once you have decided to try and sell your house at an auction, you are still able to accept a reasonable offer and withdraw your property from the sale if you agree to sell privately.
This is not always the best course of action, as getting an offer is a strong indication that you may be able to attract some good bids for your property and by taking a pre-auction offer, you could miss out on a better price.
As long as you set a reserve price so that the property is not sold for less than you are prepared to accept, a property auction could conceivably be an efficient way of getting your house sold within a relatively short space of time.
Archie Booth is a real estate investment consultant. He has always been fascinated by auctions and the opportunities they present to property investors. He enjoys sharing his insights online.