With some property auction houses reporting an increase in sales of over 60% in the first half of 2021 against the same period in 2020, what’s behind the increase and is going under the hammer right for you?
The rise has been attributed to the pandemic and consumers wanting to go digital as much as possible. Choosing auction gave a virtual platform to buy and sell homes without the usual viewings and agents in the home, along with shorter completion times than you would normally expect from a traditional estate agency sale.
Auctions have been popular with investors and developers looking for a ‘doer-upper’ for many years, but they are now attracting more mainstream buyers and sellers looking for a bargain.
With day-time TV shows such as ‘Homes Under the Hammer’ potentially attributing to the general mainstream increase, is this method of buying and selling via Auction right for everyone? Can it deliver all it promises?
Here we delve into the auction process and look at the alternatives available out there.
What is a property Auction?
The principle of an auction is relatively simple, it’s the process of buying property through bidding. Buyers can place bids on a property they wish to purchase and ultimately whoever is the highest bidder, wins the auction.
What types of properties are sold at Auction?
Auctions have been traditionally used to sell land for development, or properties that are quirky, dilapidated or have structural issues. Developers, buy-to-let investors or landlords often use auctions as their main channel of purchasing properties as it can be a way to get access to potential bargains.
How do you sell a property at Auction?
Choose an auctioneer:
There are many online auctions and traditional auction houses to choose from that can provide an auction service. Choosing the right auctioneer and their audience, be it local or national, could be key to obtaining the sale price you want so it’s worth doing research into the various options. Your chosen auctioneer will visit your home and undertake an appraisal of your property. Following the visit, they advise the price they believe the property will expect to achieve on auction day and indicate what reserve price will be applied.
Selling at a property auction, just like selling a bike or used car on eBay for example, you are charged a fee for using the service of an auctioneer. Fees vary greatly with local and national services, so again, do research into what is chargeable and when the charges are expected to be paid. The cost to sell at auction is normally around 2.5% commission of the final sale price + VAT, additional charges will also apply to advertise the property to potential buyers.
You will also need to budget for solicitors and all the associated legal fees to proceed with the auction process once the appraisal is complete. The legal pack and all relevant documentation, eg: proof of property ownership and relevant searches etc, must be in place before an auction house can begin to market a property.
Just like selling through an estate agent, auctions require your property to be marketed to potential buyers to entice more bids on auction day. The more attractive your property is, the likelihood is that you will receive more interest and therefore more bids. If your property requires modernisation or in poor condition, remember to factor the extra cost of home improvements needed into your budget and overall plans.
When your property is ready to advertise, make sure you check all the details and images that the auction house is using and ensure any mistakes are corrected so you do not mislead anyone on the condition or details of your home on auction day.
The auction house will invite potential bidders to come and view the property prior to auction day, so be prepared to host viewings and answer questions buyers may have.
Interested parties in your property will have to pre-register with the auction house to be able to place a bid. The auctioneer will ensure bidders are legitimate and will request proof of identity and carry out legal checks to prevent money laundering scams.
Once the bidding is complete on your property, they are asked to pay a nominal amount, usually around 10% of the final sale price to exchange contracts.
Once your property has been sold on the day of auction, you will be legally bound to sell your home and the winning bidder has approx. 28 days to pay the remaining 90% owed on your property. Once payment has been made, yourself and the solicitor will arrange handover of the keys and you will vacate the property immediately.
What if my property doesn’t sell at Auction?
Selling a property successfully through the auction process is not guaranteed. Your property may not sell, or the bids received at auction may not reach the reserve price you applied. However, you will still need to pay for the auctioneer fees and solicitors fees even if the sale is unsuccessful, so be prepared to pay these expenses.
How can I guarantee a sale for my home and what’s the alternative to an auction?
Although an auction sale is relatively quick, selling via the auction process does not guarantee the sale of your home. If you need a guaranteed completion date, or simply need to sell your house fast
, using a home buying service like Spring can remove the potential pitfalls and expenses of an unsuccessful auction sale.
How does Spring’s home buying service work?
A Spring sale is guaranteed, so you know exactly what proceeds you will receive and when.
Spring removes the need for pre-auction assessments and any viewings, providing a ‘contactless’ service with all documents relating to the sale available 24/7 in a personalised message centre.
All legal and conveyancing fees are included in Spring’s service. You do not need to worry about the added expense of getting your house ready for sale or re-decorating, as our ‘buy any house service’
purchases homes in any condition and in any location.
Selling to Spring puts you in control of your home sale as you choose your completion date to suit your onward move. Our transparent pricing policy, which is backed by our ‘Spring Price Promise’, provides peace of mind and reassurance.
To help with your onward move, Spring gives you access your property for up to 14 days post completion to help you move safely and in your own time.
Spring’s no-obligation service never locks you into a contract or ask you to pay anything, and you are free to change your mind right up until the day of exchange, giving you total flexibility should your circumstances change, or you simply change your mind.
today to discuss how Spring can help you make your next move with ease, speed and certainty.