Guide to Selling a House at Auction
Our guide to selling a property at auction explains the pro’s and con’s of selling at auction. Find out about auction sale costs, timescales and the process for selling at auction.
Updated: September 2020
Selling a house at auction – a guide for UK property owners. Updated by Mark Grantham on 1st September 2020
If you’re considering selling your house at auction, the first step is to familiarise yourself with the process and determine whether auction is the best option available to you. To help you understand the process of selling a property at auction, we’ve provided a 7 stage illustration, along with a more detailed explanation in the table below.
- 1) Research suitability
- 2) Valuation appraisals
- 3) Instruct the auctioneer
- 4) Marketing & preparation
- 5) Review interest & offers
- 6) Auction day
- 7) Completion of sale
Does the speed and definitiveness of an auction sale suit your circumstances, or do you require more flexibility? Think about the price you need to achieve, can you risk selling for the reserve price? There are a range of different auction options available, so it’s worth spending some time considering what type of auction best suits your personal circumstances and property type. Contact us to discuss your options.
There are hundreds of auctioneers in the UK and an increasing range of online auctions to choose from. Ask the auctioneer to appraise your property; they will suggest an auction reserve price (the minimum price your property will be allowed to sell for) and details of their costs. Ask the auctioneer to provide you with examples of recent sales for properties similar to yours. Find out what price those example properties actually sold for at auction.
Contact us for a FREE auction appraisal.
There are 2 areas of preparation before auction day. Firstly your solicitor will need to prepare the auction legal pack; you will need to respond promptly to any forms they ask you to complete. Secondly the auctioneer will carry out the marketing, which includes advertising the property and conducting viewings.
The auctioneer will provide you with feedback on the level of interest to help you make a decision on whether to accept an offer before auction day e.g. number of viewings, number of legal packs downloaded and number of buyers registered to bid (including telephone bidders and proxy bidders). In most cases it’s best to allow prospective buyers to compete for a property in the room – that’s how you can be sure of achieving the top price. However, if your circumstances mean that you have a strong preference of securing a sale before auction day, you will have that option.
On auction day buyers will compete to purchase your property – the only way a buyer can secure your property is to be the highest bidder. Bidding for each auction lot usually lasts about 2 or 3 minutes. When bidding meets or exceeds the reserve price you know you have sold! On auction day the winning bidder exchanges contracts and pays a 10% deposit, for completion of sale 28 days later. You don’t need to attend the auction, neither does your solicitor, but it ca be an exciting experience and worth doing if you are able to.
In the days or weeks after the auction solicitors will finalise the transaction. Completion usually takes place 28 after but can be sooner if the buyer and seller are happy to do so. You will need to make sure you have moved out of the property and are ready to hand over the keys on completion day. Your solicitor will receive full completion funds from the buyer and transfer the proceeds of sale to your bank account.
Choosing the right method of sale is important! It can make the difference between selling quickly for the best price, or enduring months of frustration ending in no sale at all.
In this guide
▷ Is my property suitable for an auction sale?
▷ What price will my home sell for at auction?
▷ How do sale prices compare to an estate agency sale?
▷ What is an auction guide price?
▷ How much does it cost to sell at auction?
▷ What risks are involved in an auction sale?
▷ How long does it take to sell a house at auction?
▷ How are viewings carried out?
▷ Do I need to appoint a solicitor?
▷ What happens if my house doesn’t sell at auction?
► Next steps…
This guide covers the main points to consider when selling a property at auction. For more information please contact us on 0800 862 0206.
Any property can be sold at auction, whether in good or poor condition. It’s often not the condition or type of property that determines whether to sell at auction, but the sellers circumstances. Auction’s ideal for property owners requiring a quick and reliable sale.
The misconception that only properties in poor condition should be sold at auction comes from the fact that properties in poor condition achieve higher sale prices at auction compared to an estate agency sale. It’s not a good idea to sell a poor condition property with an estate agent because buyers are able to chip away at the price stage after stage; offers are reduced after the survey, or after a builder/roofer/electrician has quoted for work that needs doing.
Auction is different, buyers do not have the opportunity to reduce their offer, with an auction sale the price can only increase, the emphasis is on the potential for the property, not the problems.
Whilst there’s no upper limit to sale prices at auction, fortunately there is a lower limit – and that’s known as the reserve price. The reserve price is a guarantee. Your home will not be allowed to sell for any less than the agreed reserve price.
The reserve price is suggested by the auctioneer and won’t change before auction day. You will need to agree to the auctioneer’s reserve price before booking your property into auction. It’s important to make sure the reserve price is high enough to cover your outstanding mortgage and other costs associated with your move.
The big difference between the sale prices achieved at auction compared to estate agency sales is the direction of negotiation. As the diagram below illustrates; estate agents start with a high “asking price” and in most market conditions (apart from an exceptionally booming market) the asking price will decrease over time and will be further negotiated down by the one and only selected buyer. An auction sale is different, the price starts low and can only increase over the course of competitive bidding.
One of the benefits of selling your house at auction is that you’re not setting an upper limit to the sale price, this often leads to sale prices well above expectations!
Not setting an expectation (asking price) makes properties with potential for improvement ideal for auction; competitive bidding between multiple buyers ensures a property finds its top price as the true value and potential of the property is revealed. Compare this to an estate agency sale, where the one and only selected buyer is perfectly entitled to reduce their offer amount for any reason at all (usually after a survey) often with cooperation from the estate agent who is eager to secure a sale at any price, without too many obstacles, so they can earn their commission.
Auction versus estate agent sale prices
With an estate agency sale the asking price starts high and decreases over the course of negotiations. But with an auction sale the price starts low and increases over the course of competitive bidding between multiple buyers.
With an estate agency sale the asking price starts high and decreases over the course of negotiations. But with an auction sale the price starts low (the reserve price) and increases over the course of competitive bidding between multiple buyers.
Find out more about auction reserve prices and why they’re so important!
Allowing multiple bidders to compete for your property not only helps to achieve a higher sale price, it also helps towards ensuring a reliable sale. Estate agency sales are prone to falling through because the one and only selected buyer is quite within their rights to back out of the sale at any time up to the point of formal exchange of contracts.
The reserve price should not be confused with the guide price. The auction guide price is the amount a property is advertised for. It’s typically set below the reserve price to stimulate interest amongst prospective buyers and encourage bidding. Getting more people through the door converts to more bidders on auction day, helping to ensure a successful sale.
Read our guide to auction sale costs to find out more about the costs involved with selling a property at auction, including tips on how to pass your costs to the buyer.
The only unfortunate outcome would be selling for the reserve price, if you were expecting to sell for more. When bidding reaches or exceeds the reserve price on auction day, contracts are legally exchanged when the hammer strikes. Unlike a private treaty (estate agent) sale where everything is “subject to contract”, at auction the sale is legally binding – sold means sold. The buyer can’t back out of the transaction and neither can the seller.
The timescale for selling at auction is 6 to 8 weeks, that’s from the time of booking into auction until completion of sale.
Before auction day. Auctioneers set their deadline for entries about 3 or 4 weeks before auction day. To book into auction you will simply need to sign and return the auctioneers terms of business. Some auctioneers will also need to see copies of ID and proof of address e.g. a copy of a driving licence or passport and a utility bill.
Once the terms of business have been received by the auctioneer, it’s a step-by-step process to auction day. The auctioneer takes care of the market and viewings. And your solicitor will take care of the legal side of things. The seller doesn’t have to do all that much, except respond to their solicitors’ enquiries. Selling at auction is very easy.
On auction day. The buyer signs a legally binding contract and pays a 10% deposit on auction day. Contracts of sale are legally exchanged. At this stage neither the buyer or seller can back out of the sale. At auction, sold means sold.
After auction day. The standard timescale for completion (when the seller moves out of the property, hands over the keys and receives funds from the sale) is 4 weeks from the date of the auction. However, if both the buyer and seller are ready to complete sooner, that can be arranged. For some sellers a 4 week completion is not long enough to arrange removals and move out of the property. The timescale for completion can be extended for a longer period by adding a clause to a document called the Special Conditions, which forms part of the auction legal pack. This will need to be done before auction day. It’s not unusual for completion to be set 6 weeks or 8 weeks after auction day.
Read our full guide to the auction sale process for a step-by-step guide to the timescales of an auction sale.
The auction company will arrange block viewings, allowing prospective buyers to view the property in the 3 weeks running up to auction day. There would typically be 5 or 6 block viewings in total, each lasting half an hour. A viewing schedule will be made available (along with the auction catalogue) approximately 3 weeks before auction day, specifying the times and dates of the viewings.
A set of keys will need to be provided to the auction company, so that an auction representative can open up the property and show prospective buyers around. There is no requirement for the seller to be present during the viewings.
Yes, you will need to appoint a solicitor to help with preparation of the auction legal pack and conveyancing. Most property solicitors will be very happy to help with an auction sale. Your solicitor will not be required to attend the auction on auction day.
Auction is one of the most reliable methods of sale available, approximately 85%+ of properties successfully sell at auction. But still, this is a question that seems to be asked by a lot of homeowners.
If bidding fails to reach the reserve price on auction day, the auctioneer will try to secure a sale as soon as possible after the auction. In some cases that might be within a few minutes of bidding. If a sale cannot be concluded on auction day, the property will be advertised as “unsold” and the auctioneer will continue to advertise the property on the portals (e.g. Rightmove and Zoopla) for a period after the auction. There is no commission to pay if the property doesn’t sell.
If the property remains unsold by this stage, there is also the option of entering the property into a later auction.
Need help selling your home? Call 0800 862 0206 or send us an enquiry online.
Property auctions offer an ideal route to a quick and reliable house sale. Our guide to selling at auction is intended to provide you with a quick start to understanding the basis of selling a property at auction.
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