If you are considering selling property, there are different avenues you can explore beyond using an estate agent.
One of those options is via auction, where your property is sold through an auction house. This route generally works if you want a quick sale, but it does not always mean you get the best price for your property.
There are benefits to selling via auction, but you need to take into account several important factors, such as the costs involved and the risk that a sale is not necessarily guaranteed.
What are the advantages of selling through auction?
The main advantage of selling via auction is the speed of the process. Sales, should they happen, are generally much quicker, with buyers required to pay a 10 per cent deposit on the day and the remaining sum within 28 days.
The sale is ratified and confirmed by law should your property receive a successful bid on the day of the auction. This means that should the buyer pull out, they will face significant financial penalties.
In addition to this, should an individual’s bid be successful, they must pay the full amount their bid came to. There is no scope for negotiating a deal.
Selling through auction means the process is chain-free, with no interference from outsider parties. The chain is solely between you and the buyer who bid successfully at the auction.
There is also the potential of attracting significant buyers and investors, as property investors will examine the properties available and decide from there if they are seriously interested in bidding.
This could mean you could get your asking price or potentially more, depending on how many people are involved in the bidding process.
What are the disadvantages of selling through auction?
While the sales process may be much quicker than selling via an estate agent, the fees are much higher. The auction fees amount to a percentage of the sale, which is around 2.5 per cent.
As an example, if your property sells for £400,000, the auctioning fees would sit around the £10,000 mark. It’s important to consider the costs involved before choosing the auction route.
In addition to this, there is the possibility of your property not selling at all. A lack of interest could lead to the property going unsold at the auction. Ahead of the auction, you will need to drum up interest, and that could include advertising, which has costs in its own right.
At a minimum, any bid must meet the reserve price otherwise the property will not be sold. The auction sale price is final. You will receive whatever the property is sold for, providing it meets the reserve price.
There is a lot to consider before deciding to sell your property via an auction. You must be sure it is the right decision because there are no guarantees the property will sell, and you could be left with additional costs to manage.
How do I decide if an auction sale is the right way to go?
Deciding to sell your property via auction is a decision that needs serious thought and consideration.
There are plenty of positives and negatives, but it depends on your circumstances and potentially the value and current state of your property.
If you are considering an auction sale, you should speak with conveyancing and property solicitors who can advise and support you.
They can offer tailored advice, help you create a contract package and provide comprehensive support throughout the auction process.
Get in touch today if you are considering putting your property up for auction.