Selling a property at auction can be a great option for homeowners who are looking for quick sale or have a troublesome house that isn’t selling the conventional way. However, there is a lot to consider when selling a property at auction and it’s important to have all the information before you start the process, so you can ensure it will go smoothly without any stress or problems. That’s where this guide comes in. We’re going to be looking at the key things you need to know about the process of selling at auction – to fully prepare you if you decide it’s the right path for your circumstances.
Firstly, why sell at an auction?
The housing market can be temperamental sometimes and quite often buyers will overlook properties that are more unusual or require a lot of work. As a result, these properties can be left for a long time with little to no interest being shown, meanwhile you’re sat around waiting for it to sell. Also, problems like structural damage, a short lease, or a normal mortgage can’t be secured on it, can mean your property will have a better chance of selling via auction. A property doesn’t have to be in bad condition to be sold at auction though.
Many sellers have homes that are completely standard and ready to move into straight away. It could just be that they want the house sold quickly and don’t want a long, drawn-out selling process. The great thing about an auction is that there will be a wider range of potential buyers including experienced investors, builders, and developers. Buyers like these are often more open minded and can see the potential in a property after work has been done on it.
Is it expensive to sell a property at auction?
A commonly asked question when it comes to selling a property at auction is about cost. In comparison to selling a house the normal way using an estate agent, auctioning will almost always be less expensive. There are three main costs you will need to take into account if you auction your property:
- The price for getting the property listed – auctioneers normally charge around £300 plus VAT for this
- Solicitor and pre-auction conveyancing fees – this won’t normally be too expensive, but there is always important legal paperwork to be completed in any house sale
- Auctioneer fees – when a final price for the sale has been agreed you will need to pay about 2% of that cost plus VAT to the auctioneer
The process of selling a house at auction
Contact the auction house
If you decide that you want to sell your property at auction the first thing you will need to do is contact a local auction house. They will ask you about the house you want to sell, and good auctioneers will know how to find potentially interested buyers in a property like yours. Then the auction house will download paperwork from HM Land Registry and carry out anti-money laundering checks. A formal property valuation isn’t always necessary but if the house has unique characteristics the auctioneer may want to have one completed.
Agree a reserve price
Once you have signed the contract with the auction house and agreed to the terms of sale you will then need to decide on a reserve price. The reserve price is the minimum price that you would be willing to sell the property for. It’s important to note that a reserve price can be different from a guide price, which is the price the auctioneer will advertise the house for in the marketing material.
The reserve price won’t be told to anyone else, it’s between you and the auctioneer. If the reserve price does not get reached during bidding, interested buyers can submit a post-auction bid on auction day. You aren’t obligated to accept any offers if you’re not happy, the house will be re-listed at the next auction for a fee, or you can remove it.
You should instruct your solicitors to begin the conveyancing process at this stage, including beginning the relevant searches and drawing up paperwork. This documentation is known as the legal pack and is uploaded onto the auctioneer’s website for buyers to see. Auction legal packs generally include the Title Register, the plan from the Land Registry, lease information, and any other key details a buyer would need to know. If you’re looking for professional auction conveyancing in Cramlington, the team at Toomey Legal can help.
Buyers can sometimes contact the auction house to make an offer before the auction day itself. This can sometimes be beneficial if the buyer is committed, and you want the property to sell quickly. Plus, you will have peace of mind that the house is definitely going to sell for a price that you’re happy with. However, this isn’t always the best option and in many cases the auctioneer will likely recommend that you hold out until auction day. Even though there is a risk the house might not sell, you will know that there is interest and demand.
Day of the auction
The auctioneer will try to push the price up towards your reserve, but success on the day will largely come down to how much interest there is in properties like yours and the position of the market. In an ideal world you would want buyers to be bidding competitively to push the price to over your reserve. When the bidding has concluded, contracts are exchanged, and the buyer is required to pay a 10% deposit on the property upfront. After this the buyer is legally obliged to complete the sale, normally within 28 days.
If you’re selling a property at auction and need quick conveyancing in Newcastle contact Toomey Legal today. Our experienced conveyancing solicitors have the knowledge and expertise to get your conveyancing sorted as quickly and efficiently as possible, so you’re fully prepared for auction. Using a trusted team of solicitors like us will help to ensure that the process goes smoothly without any unnecessary problems or delays.