What is the best way to sell at auctions? You can let the buyers scrap it out, and hopefully, they will drive up the price of your property – but you should know what you are doing and how to make sure the auctioneer does not take advantage.
So why sell at auction?
Auctions have a significant advantage, and anyone who has tried to sell a property will tell you it can be a very stressful time. So if you would like to sell quickly and want some security that the buyer isn’t just going to disappear then auctions are an excellent way to go. Once the hammer falls, the buyer is obliged to put down a 10% deposit. They then have one month to give you the remaining 90%.
One great advantage of auctions is that when you have multiple buyers interested in your property, it can help to drive up the price, mainly when they are all in the room together people feel pressured, and the fear of missing out sets into your mind.
Auctions are great if your property is run-down or very original. As a less conventional property can be harder to sell on the standard markets by can be just what the expert buyers or people looking for a project could be looking for, and these types of buyers know enough about the market to recognise the value of your property.
If you want a quick exchange because you are moving out of the area, or you need the money urgently, then an auction could be for you, provided there is enough interest, and you have set a realistic price, you shouldn’t have any problem selling at an auction.
Do not feel pressured into making a quick decision.
At the auction, the sale is binding the moment the hammer falls, and you will sign and exchange contracts straight afterwards. So there is no time for hesitation or getting cold feet. If at any point, you feel pressured into making a decision, take a step back and speak to your solicitor.
What guide price should you set?
Your auctioneer will help you to make this decision. This price will become public knowledge and can be used as a tool to attract buyers. It’s merely an idea of what the house is worth, so don’t worry about putting a lower than the reserve price as you are not obliged to accept it.
Should I accept an advance offer before the auction day?
If you’ve made the decision to sell with an auctioneer and you’ve paid the required fees, then why would you want to miss out and sell it before the auction even begins?
If a buyer is trying to persuade you to sell before the auction starts, then maybe other buyers are going to be just as keen so why not let them fight it out with all the others?
Also, it is worth considering that the buyer knows something you don’t. Maybe they know something about the planning permission in the area or something that could potentially make your property sell at a much higher price.
How to choose which auction house to use?
You can start by looking at their promotional material for other houses. Do you trust that they will get the best price out of your property? Do you have any trusted acquaintances who can recommend an auction house to you?
An established auction house could be more expensive, but it is also more likely to understand the market and how you advertise your property to the maximum number of potential buyers.
You could end up finding that a less well-known company is more accommodating and cheaper, so you will need to shop do your research and choose the one that suits you best.
How much does it cost to sell at an auction?
Usually, the auctioneer’s fees are about 2.5% of the price you receive for the property, and you’ll need to find out if they charge any additional advertising costs.
You will have to pay a solicitor to help with legal matters before and during the auction. Solicitors’ fees vary, so try and find recommendations and look for a reasonable price with excellent quality service.
How do I know what reserve price to set?
Your reserve is the lowest price you are willing to accept. This is not public knowledge, and only the auctioneer and yourself will know this figure. If all the offers are below your reserve, the auctioneer will withdraw the property from the auction.
Once someone has offered your reserve price or above, then the auctioneer will drop the hammer, at this point you can’t back out, so make sure you are sure of the price you are willing to accept before starting.
If your property has been on the market previously and you have not had any offers at the price you wanted, perhaps you are unrealistic, and you may need to lower your expectations before going to auction.
Do not despair if you realise that you have set your reserve a bit too high. You can still always negotiate with a buyer after the auction, so it is always better to go on the more expensive side than sell yourself short.
Modern practices are now used in an auction.
Nowadays, auction houses have started to adopt newer methods which allow buyers to bid on the property online. The buyer will pay a non-refundable reservation fee. However, they will be given a longer completion timescale. The additional time is to help the buyer sort out a mortgage or finance.
How quickly will the sale completed after the auction?
One of the main benefits of auctioning your home is, just how quick it can be. It can take only one month to get your property in the auction house and then as little as 28 days afterwards the sale could be completed. However, this also means you need to be able to move quickly once the purchase has gone through.
DISCLAIMER: These articles are for information only and should not be construed as advice. You should always seek advice prior to taking any action.