Is auctioning your house a smart move?
While the majority of people traditionally sell their houses through an estate agency or privately, there is a growing trend towards using auctioneers to sell property. In the past there has been a slight stigma attached to selling a house through auction; the stereotypical image is one of a derelict house that has been repossessed and is now going for a quick sale.
However, this is a perception that is now changing, and selling your property through an auctioneer can be the ideal way of ensuring you get the best price with no last minute hitches.
How do you sell by auction?
Selling at auction involves contacting an auction house, registering your property with them and then (hopefully) see your house attract an excited bunch of potential buyers sending the price through the roof.
This is obviously a simplistic view of the whole process, and before you even contemplate taking this route you should go to a couple of house auctions to see what happens.
Once you have decided this is the right option for you, then you need to choose an auctioneer who has expertise in your selling your house-type. At your meeting with the auctioneer you will agree a reserve price – the minimum that you will accept – and then you will agree a date for the sale to take place.
What are the advantages of selling your house by auction?
- With the resurgence in the property market, particularly in areas where demand far outstrips supply, the excitement and interest among potential buyers at an auction can mean that the price of your property is driven up.
- There is no chance of gazumping or the buyer pulling out at a later date. Once the hammer falls the contract is legal and binding, the purchaser has to pay a 10 per cent deposit at point of sale, and pay the remainder within 28 days.
- If a speedy sale is important to you, then an auction is usually much quicker than the traditional estate agency. You register at an auction house and the auction takes place a month later. You then have 28 days before the sale is completed. This two-month turnaround is appealing to people who want to get the money out of their house quickly.
- You are far less likely to suffer the disappointment and frustration that comes from being part of a selling chain that falls apart. If a buyer reneges on an auction sale you will keep the 10 per cent deposit and can have the house back up for auction immediately.
The downside of going under the hammer
Of course there are also disadvantages to taking the auction route. While you might benefit from a quick sale, and the market may push your house price up to stratospheric levels, the reverse can also happen. The house might sell for a lot less, or you may not find a seller at all. If you do sell, the auction house takes a hefty commission of 2-2.5 per cent of the selling value, and if you do not sell, you still have auctioneer’s costs to pay.
You will also have solicitor’s fees to pay, and your solicitor will usually need to be present to deal with last minute details and legal queries.
Prior to a house being auctioned, it is opened to the public and, unlike the orderly queue of appointments that you expect with an estate agent, with an auction there is the prospect of a steady stream of people, including surveyors, traipsing across your property.
The key message here is that auctions might be the right option for some people, but do your homework and ask around for advice to avoid making a costly mistake.