One of the options that homeowners consider when selling their house or flat is to list it for auction. This can seem an attractive prospect because of the potential for competitive bidding, where eager buyers keep trying to outbid each other with ever-higher prices. If you’re looking to sell for a market competitive price, pursuing an auction can be a viable choice.
However, auctioning your property can also be a risky move because you are effectively gambling that you will get more for your home than the minimum opening bid that you choose. That means there’s no guarantee of a high sale price (or indeed a sale at all), which can be a concern for some home owners.
Before deciding to sell at auction or pursuing another route to sale – for example through an estate agent or a property buying company – it’s useful to know exactly how the often-lengthy auction process works, as well as more about its pros and cons.
What’s the process for selling a house or flat at auction?
Auctioning begins by contacting a licensed property auctioneer and having one or more conduct a free appraisal on your house or flat. They will assess the property and tell you a suggested minimum opening bid price, or reserve price, and should also disclose their fees for auctioning.
After you decide on an individual auctioneer to handle your property, you’ll be required to sign terms of engagement – the initial document that gives the auctioneer the right to oversee selling your house. Once this is signed the auctioneer will enter your home into their catalogue of available properties that will then be distributed to potential buyers. They will handle all the marketing of the listing, such as placing ads in newspapers, property websites, and more (if appropriate).
While the marketing is happening, your solicitor will put together a legal pack of documents with important legal details about the property.
Once the auction date is set you will have to confirm the reserve price, and this could change from the initial suggestion depending on how much interest your listing is generating.
At auction, buyers will be able to make bids either in-person or off-site by phone or the internet. The auctioneer will ask for a bid on the reserve price, and then hopefully other buyers will make higher bids until nobody offers any more bids. At this point the auctioneer will bang their gavel, and this marks the creation of a binding legal contract to buy your house.
All that’s left after the auction is complete is for your auctioneer and solicitor to work on the necessary legal paperwork on the sale, which can take about 28 days. However, this schedule can potentially be shortened or lengthened depending on your needs.
Is auctioning my home the right choice?
The most enticing aspect of auctioning your home can be the potential for a final sale price that is higher than whatever opening minimum bid you set. When a property is particularly attractive to prospective buyers it can lead to competitive bidding. This happens when at least two buyers have strong interest in buying, outbidding each other with ever-increasing purchase bids. In this regard auctioning can be a great move.
However, auctioning does not ensure that you’ll get competitive bidding (you may receive no bids at all). Some homeowners set the reserve price at a level lower than they really want to accept, because they hope that the low price will lure many bidders who will then try to outbid each other for a much greater final sale price. But if that doesn’t happen you could end up accepting a lower value than your financial goal.
Another pro of auctioning a house is the fact that you’ll be given a fixed date for when the auction will happen, giving you certainty on the date that it will sell.
But, as described above, the auction process for properties can be very lengthy, so it might not be ideal if you are looking to sell your house or flat quickly. You’ll also have to pay the auctioneer fees for handling the sale, which will subtract from the overall amount of money you receive once the sale is complete.
What alternatives are there to auctioning my home?
You could try selling your house through the traditional route of working with an estate agent. This has the benefit of having a professional handle the listing and viewings of your property, which can help to significantly reduce the hassle of selling.
Selling through an estate agent means you will also have to pay also pay fees when the home sells, which is not the best choice if you want to make the most money possible from selling.
Another alternative is working with a property buying company like LDN Properties to sell your house or flat directly to them. This cuts out the middleman, because with this option you’ll be given a quick and competitive offer for selling without having to pay any fees.
Every home sale is unique and depends on a host of factors, including whether the owner of the house or flat needs a quick sale, or their financial needs when selling. Therefore, deciding whether auctioning is right will depend on consideration of these factors.