There are several ways to sell a residential property. Auctions are becoming more popular, especially with people seeking a quick house sale. But there are pros and cons to selling this way.
In this comprehensive guide, our property experts will provide all the information you need to decide if this is the best way for you to sell your house fast.
When a property is sold at auction, interested parties are invited to submit bids until the auction closes. At this point, the highest bidder wins. The winner then has a fixed timescale for exchanging contracts and completing the sale.
There are two types of property auction — traditional and modern — and several differences between the two. A traditional auction is held at an auction house, contracts are exchanged on the day and the winning bidder has just 28 days to complete the sale. A modern auction is held online over a period of days or months, and the buyer has 56 days to exchange and complete the sale.
Modern auctions have become much more common in recent years. Buyers on the hunt for a bargain are attracted by this format’s relative flexibility and convenience, compared to traditional auctions that typically attract cash buyers and investors who have the funds readily available to make a purchase.
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If you’re new to auctions, the terminology can seem daunting. So let’s get you up to speed with some of the key terms we will use in this guide.
Auction or “Buyer Information” Pack – ontains all the property information that bidders need to decide whether to bid or not (and how much to bid).
Auctioneer – the person who runs the auction process.
Cash Buyer – has the funds ready to purchase a property outright, without the need to secure financing such as a mortgage.
Chain-free Buyer – the buyer does not need to sell their property to buy a new one.
Completion – the sale is legally finalised and the keys are handed over to the new owner.
Exchange – when contracts are exchanged, the sale becomes legally binding; this takes place on the auction day at a traditional auction or within 28 days for a modern auction.
Guide Price – the figure used to market the property and indicate its value.
Modern or “Conditional” Auction – bids are placed online and the buyer has 56 days to exchange and complete the sale.
Reservation Deposit or Fee – a non-refundable fee paid by the buyer to reserve a property they have bid successfully on at a modern auction (at a traditional auction, this is not necessary as contracts are exchanged on the auction day).
Reserve Price – the lowest amount the seller is willing to accept.
If you need a quick house sale, an auction may be a more appealing option than a lengthy on-market sale. It often takes months or even years to sell via an estate agent, especially if you have a “problem property” or the market is slow. At an auction, the buyer must complete their purchase within 28 to 56 days, depending on the type of auction.
However, there are no guarantees that your property will sell at auction, and it can be a difficult process for beginners to navigate successfully.
Selling at auction is a good option for some people but be sure to weigh up the pros and cons before committing to this type of property sale.
Sell within 28 to 56 days
Find a Chain-Free Buyer
Easier to Sell a Problem Property
Competition Can Drive Up the Price
Access to Serious Buyers (fewer time-wasters)
Avoid “Gazundering”*
Access to Lots of Cash Buyers
High Fees
Uncertainty (sale isn’t guaranteed)
You Need to Move Quickly
Traditional Auctions Can Take Months
Setting the Right Reserve Price is not Easy!
Lost Time and Money if a Property is Unsold
Confusing for First Time Sellers
* Gazundering is when a buyer suddenly drops their offer between the exchange (when the sale becomes legally binding) and completion; this is not permitted in purchases made at auction.
Selling property at a modern auction has become more popular in recent years, but the process is not as straightforward as it may appear, and novice auction sellers often make mistakes that cost significant time and money. For example, setting the guide price (an indication of how much bidding should start at and how much the final sale price could be) low seems like a good way to get several bidders interested in a property. However, the reserve price (the minimum amount you are willing to sell for) must be within 10% of the guide price, so an inexperienced seller could end up accepting a much lower offer than they are happy with.
The step-by-step process of selling at a traditional auction:
01Gather Information About Your Property
02Choose an Auction House
03Receive an Estimated Value
04A Valuer will Visit Your Property
05Confirm Your Agreement to Proceed
06Set a Guide and Reserve Price
07Instruct a Solicitor
08Market the Property (including preparing a Buyer Information or Auction pack)
09Review Pre-Auction Offers
10Auction Day (including the exchange of contract)
11Completion
If the property does not sell, you can negotiate with the highest bidder or relist the property at the next auction.
A modern auction follows a similar process. However, there are some key differences:
Bids are made online within a specified time window — typically around a month, but the buyer chooses the duration and can reduce this if they need to sell their house fast.
Instead of exchanging contracts when the auction closes, the winning bidder pays a reservation deposit or fee to secure the property; the exchange of contracts can take place up to 28 days later (and completion another 28 days after this).
As with a traditional auction, there is no guarantee that your property will sell.
To get a guaranteed cash sale, find out more about how a sale to HBB works or chat with one of our friendly team members.
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The costs of selling a property at auction can quickly add up. Typical fees include:
And don’t forget the cost of rookie mistakes! Set an ill-advised reserve or guide price and you could end up walking away with a lot less than you hoped for. Worse still, your property may not sell at all, which means that all the money spent on the auction is wasted.
The seller at an auction has complete control over the contract of sale, so you could include a clause that means most of your costs are passed on to the buyer. However, this may not be the savvy move you think it is, as most buyers will drop their offer if the buyer fees are high.
Find out more about how much we could pay for your property and how much you could save in estate agent and auction fees by opting for a quick cash sale to House Buyer Bureau.
A quick Google search will throw up hundreds of auction houses that will be eager for your business. You can also browse through online property portals such as Zoopla to find the details of auction houses currently marketing properties.
As with choosing an estate agent or a solicitor, take the time to research, compare and shop around for the best terms and conditions. Do you know anyone who has sold via an auction house? Would they recommend the one they used? Do you want to sell via a traditional, modern auction?
Once you’ve selected an auction house, make sure you understand the agreement you are entering into. Ask for a written list of the fees you’re liable to pay, whether or not your property sells. A few “surprise” fees could significantly eat into your profit.
There are many reasons why people choose to sell a property at auction.
If you’re going through a divorce, have an inherited property to sell or are struggling to find a buyer for your home via the traditional route, a quick sale at auction, with the potential for competition to drive up the sale price, may be an attractive prospect.
Property auctions used to be the preserve of investors and developers looking to snap up a run-down property they could do up and sell on. Most properties that went to auction were “problem” properties that were hard to sell on the open market. But as the public has embraced modern auctions in recent years, all types of properties are sold at auction, attracting an eclectic mix of sellers and buyers.
If any of these sounds like your property, selling at auction might be an option worth considering:
Many people choose to sell at auction for the speed and the possibility of achieving a higher sale price than they could do using an estate agent. Whatever type of property you have, you’ll need nerves of steel and the time to thoroughly research the process to avoid making costly mistakes.
Check the Small Print – make sure that you know what fees you will have to pay before committing to an auction house. Ask for everything in writing to avoid hidden fees cropping up further down the sales process.
Avoid Too-Good-to-Be-True Deals – if an auction house quotes extremely low fees, this should act as a red flag. There are likely to be fees added later on, or a scammer might have targeted you.
Don’t Set the Guide Price too Low – the reserve price must be within 10% of the guide price. Setting a low guide price will attract more buyers, but you could end up having to sell your property for much less than you hoped for!
Check if Fees are Refundable – there is no guarantee that your property will sell. Make sure to ask which fees you will still be liable for if the property remains unsold when the auction closes.
Research the Competition – if there are properties similar to yours listed in the same auction, factor this in when setting your reserve price.
Be 100% Sure Before Committing! – if you agree to sell your property via an auction house and then change your mind, you could be charged a “withdrawal penalty” — all the more reason to do your research before signing up.
If you’re motivated to sell your house fast, auctions are not the only option.
A traditional open market sale via an estate agent takes an average of 110-115 days, but many properties take longer to sell. So this is unlikely to meet your needs if a quick house sale is your priority.
Auctions typically offer a faster route to selling, but as discussed, they are not for the novice nor the faint-hearted. There is a simpler, quicker way to sell.
House Buyer Bureau is a genuine cash house buyer and one of the few recommended by The Advisory, an independent source of information for house sellers. We have the funds to buy your house in as little as 7-days. There are no fees to pay — we do not charge for our service, and you will have no estate agent or solicitor’s fees to pay (provided you use one from our network of quick house sale specialists). What’s more, we offer a guaranteed sale, and all cash offers are backed by our Price Promise.
