Selling a house or flat through an auction can be a great way to potentially make a decent profit on the sale, particularly if many people are interested in buying your property.
That’s because property auctions work just the same way as auctions of personal items, where the goal is competitive bidding in which bidders keep offering ever-increasing prices to buy the property. In an ideal situation, your home might be so popular that the final auction sale price is significantly higher than you could have made if selling the property through other means, such as quick cash buyer or an estate agent.
However, it’s also important to note that auctions can be risky because you can never exactly predict what the final sale price for your property will be. It’s entirely possible that you might not receive any bids during the auction, in which case the home will not be considered sold and you’ll have to start over with another auction or trying and alternative method of selling. This can be a major setback if your top priority when selling is to find a buyer as fast as you can in order to deal quickly with an issue such as needing to relocate in the UK.
Or perhaps your home might only receive a single bid at whatever reserve price you have agreed to with the auction house. This is the minimum price at which you’re willing to sell your home, and auctioneers typically encourage homeowners to set this at a level below market value in order to drum up interest from a larger group of potential buyers. Be sure to set this price at a level where you’ll still make a profit if it only receives one bid, after paying the auctioneer their fees. Don’t set a reserve price that will make you lose money on the sale.
Further, some auctioneers specialise in only selling certain types of properties. An auction house that only has a track record of finding buyers for commercial buildings is unlikely to know the best way to advertise and sell a home. Or a residential property auctioneer might not have the skills to find buyers in some cases, such as trying to sell a dilapidated house.
Because of that uncertainty, you should do some advance work before deciding whether to use an auctioneer. Be sure to search for specific auction houses online, because this will help to uncover any potential negative news articles or bad customer reviews. Ask auctioneers important questions that will give you more insight into whether they’re the best option to find a buyer for your property. And consider some of the other ways that you could sell your home.
Top questions to ask an auctioneer before selling your home
Auctions are one of the most common methods for selling a freehold or leasehold house or flat. The other two choices are using the traditional approach of using an estate agent, or the increasingly popular option of selling to a fast cash home buyer. If you ask an auctioneer some or all of the questions below and their answers give you pause, it may be worthwhile contacting Auction Link.
Q. Are you able to auction off my house or is it outside your coverage area?
A. This is a vital first question to ask, because although some auctioneers are able to sell properties throughout the UK, others only sell homes within a limited geographic area. If the first auction house you speak with can’t sell your property, call others who might be able to help.
Q. What commission and other fees will you charge for selling my property?
A. It’s essential when selling your home that you prepare a budget that, as accurately as possible, projects the potential profit and expenses you could make. You need to do this so that you have an idea of how much cash you’ll have to help with buying your next home. Part of this budgeting is subtracting the fees that auctioneers will charge for selling your property.
Some auctioneers charge commission of 2 percent or more of your home’s final sale auction, along with other fees. But each auction house is different and that’s why you need to ask around to get full details of the expenses that you might have to pay when selling this way.
It’s also worth asking whether you can pass the obligation for paying these costs on to the winning high bidder on your property, because some auctioneers will allow this.
Q. Will you sell my home through the modern or traditional method of auction?
A. There are two methods of selling a home through auction: traditional and modern, and you should ask each company that you speak with about their preferred choice. Some auctioneers offer both, others specialise in just one type of selling, and they have important differences.
Traditional auctions are those where buyers gather at a specific day and time to place bids on properties, and the bidding continues until the auctioneer says the famous words “going, going, gone” and then lowers their gavel with a bang to signal that the auction is over.
Modern auctions are those where a property is listed for sale on an auctioneer’s website for a set amount of time, usually a few weeks. People from remote locations can place bids via their computers until the end of the auction. If someone outbids another buyer, the new high bid will be available to see by anyone that visits the auction listing online and they can place another higher bid.
Q. Do you have any experience with auctioning my type of property?
A. Another important query that will give you some knowledge about the prospects for whether a certain auctioneer might actually be able to sell your home and get you a decent profit.
If you have a property with unique or potentially negative aspects then some auction houses might not understand how to market and sell the home if they’ve never sold anything similar. If that’s the case and your property fails to gain any interest from buyers, it won’t receive any bids and you will have to start the entire process of selling from the beginning again.
Q. How long will it take to sell my home through an auction?
A. For many homeowners, finding a buyer for their property is the number one priority. You should ask an auctioneer this question because it will give you a good idea of how many weeks or months you might be waiting until finding out whether your home sells at an auction.
When you list your home for sale at an auction, you’ll typically have to wait several weeks before the sale takes place, so that the auctioneer can advertise the property to generate interest from prospective buyers. And then if your home does sell at the auction, you’ll have a wait of several more weeks whilst the required legal paperwork for the sale is completed.
Many auctioneers set a deadline of 28 days from the date of the auction for the buyers to finalise the purchase of a property, but some auction houses have shorter or longer deadlines.