Since lockdown began, property auction houses have seen somewhat of a resurgence, with some of the UK key players in the Auction industry reporting an increase in almost 40% compared to the same period in 2019. Is this increase due to more homeowners watching the iconic daytime BBC show ‘Homes under the Hammer’ during lockdown, or is this increase in popularity a sign of the future and how people want to sell or buy a home?
But are Auctions right for you, are they a reliable way to sell your home and are there easier, more cost effect ways to sell? Here we discuss auction sales and look at the alternative options.
What is a property Auction?
An auction is the process of selling and buying property through bidding. A bit like an ebay sale, buyers have the opportunity to place bids on a property they wish to purchase. Buyers bid against each other and ultimately 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, unusual, 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 great way to obtain a bargain property at a great price.
How do you sell a property at Auction?
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, local or national, could be key to obtaining the price you want so its 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, 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 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 is not in a good condition or requires modernisation, 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 don’t 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 bid 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 vacant the property immediately.
What if my property doesn’t sell at Auction?
Selling your house through the auction process is not guaranteed. Your property may not sell, or the bids received at auction may not have reached the reserve price you applied. However, you will still need to pay for the auctioneer fees and solicitors fees. Be prepared to pay these expenses and be out of pocket if your property doesn’t sell.
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 an auction is a gamble and does not guarantee the sale of your home, nor does it guarantee the best price.
If you need to sell a property quickly, or just want a sale that is guaranteed and provides certainty for your onward move, using a home buying service like Spring can remove the uncertainty of an auction sale and the potential expensive pitfalls of an unsold auction property.
How does Spring’s home buying service work?
Unlike an auction sale, a Spring sale is guaranteed.
Spring does not require an in-home assessment to value your home like when selling at Auction, nor does it require any potential buyers viewing or entering your home. Our homebuying service provides you with the ability to sell your home from your sofa and be a ‘contactless transaction’ through Spring Secure
. This feature is particularly important for those who do not want to increase their risk to Covid-19 if elderly, vulnerable or have general health conditions or concerns.
All legal, solicitors and conveyancing fees are included in the Spring service. You do not need to worry about the added expense of getting your house ready for sale or re-decorating, as Spring buys homes in any condition.
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 an industry first ‘Spring Price Promise’
, provides peace of mind that your house is getting the best price it deserves.
To help with your onward move, Spring will allow you to access your property for up to 14 days post competition to help you move safely and in your own time.
today to discuss how Spring can help you make your next move with ease, speed and confidence.