Selling a House at Auction vs Quick House Sale

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    If you need to sell your house fast, a “traditional” sale with an estate agent is unlikely to deliver the results you need. It can take months to sell on the open market — the average time is around four months, but it may take a lot longer if you have a hard-to-sell property or the market is slow.

    Are there any quicker routes to selling a house? You bet. Both property auctions and quick house sale companies provide a faster alternative. But which one is right for you? If you’re looking for “selling your house tips”, read on to find out the pros and cons of each way of selling.

    What Is a Property Auction?

    There are two types of property auction — modern and traditional. 

    Traditional auctions have been around for years but have generally been the preserve of property developers, investors and cash buyers. Interested parties are invited to attend an auction house at a specific date and time where they can bid on any listed property. Contracts are exchanged on the auction day, and the winning bidder must complete the sale within 28 days.

    Modern auctions have become increasingly popular in recent years. Competition is fierce, and people from all walks of life are attracted by the potential for a quick sale and a higher sale price. Buyers are enticed by the prospect of snapping up a bargain “fixer-upper”. Modern auctions offer more flexibility and convenience than traditional auctions. They take place online, and the buyer has 56 days after making a winning bid to exchange and complete the sale. 

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      How Does a Property Auction Work?

      Both types of auction work in a similar way for sellers.

      You will need to research and select an auction house that will conduct a valuation of your property. If you’re happy with the valuation, you can confirm your agreement to proceed and set a guide and reserve price. The guide price is shared with potential buyers to give them an idea about how much to bid. The research price is the minimum amount you would be willing to sell the property for. There must be no more than a 10% difference between the guide and reserve price.

      Next, you will instruct a solicitor, and the auction house will market your property. You may receive some pre-auction offers, which you are free to review and accept. Or, you can wait for the auction day and exchange contracts with the winning bidder on the day. Completion must take place within the following 28 days.

      The main differences between this type of traditional auction and a modern auction are that bids are made online during a specified period, often around a month. The winning bidder only pays a deposit on the day of the auction (the exchange of contracts can take place any time within the next 28 days).

      Why do houses go to auction?

      The three most common reasons for selling a property at auction are:

        1. You need a fast and certain sale
        2. You have a property that has the potential to grow in value
        3. You have an unusual or ‘problem property’

      Let’s explore each of these in more detail.

      Sell at auction for a faster sale with more certainty
      Auctions can be a quicker way to sell than selling on the open market via an estate agent. Depending on the type of auction the whole process can be completed in a couple of months.
      About 75% of properties will successfully sell at auction, so whilst it isn’t a guaranteed sale, it is better than the c. 50% that estate agents achieve.

      Properties with potential
      Auctions attract property investors looking for their next project. What they’re really looking for are properties they can refurbish and add value to – either by extending the property to add more living space, converting it into several apartments, or simply refurbishing to a far higher standard. So if your property fits that profile it is likely to do well in an auction.

      Unusual or problem properties
      A problem property can come in many forms. It might be a structural issue requiring significant work, an uninhabitable property or one that is a non-standard construction e.g a timber frame. These types of property would likely take months to sell on the open market and buyers might have difficulty getting mortgage funding. At auction, given the fast turnaround, your audience will be experienced cash buyers. Auctions can be a great way to sell if your property.

      Selling Property at Auction Pros and Cons

      There are many reasons why you might be interested in selling a property at auction. Perhaps you have a problem property that is proving hard to sell? Or maybe you have inherited a house, and you want to sell it without the stress and emotional upheaval of constant viewings and a lengthy wait for a sale?

      But selling at auction is not a straightforward process for people new to it, and costly mistakes are common. Make sure that you understand how it works and weigh up the pros and cons before committing.

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      Pros

      1. Speed of sale. Selling at auction is typically faster than an on-market sale. A traditional auction should complete within 28 days and a modern auction within 56 days, compared to around four months on average, to sell a house via an estate agent (this can be a lot more if you have a house in poor condition or of non-standard construction
      2. Avoid property chain problems. Buyers at auction are often cash buyers with no chain. Securing a mortgage within 28 or 56 days can be difficult, plus auctions attract a lot of bargain hunters and developers who want to buy a property for cash and do it up. One of the main benefits of selling to a cash buyer is avoiding the delays and disruptions of property chain problems.
      3. Sell a problem property. It can be challenging to sell certain types of property via the traditional route. Many buyers will be put off by the need for extensive repairs, dry rot, noisy neighbours, title problems and anything else that adds to the stress and expense of purchasing your property. Auctions have long been the go-to house sale option for people with hard-to-sell properties because they attract developers and bargain hunters who are eager to find a property they can do up and add value to.
      4. The possibility of a higher sale price. Competition could drive up the final sale price of your property. If multiple bidders are interested, this could result in a better outcome than you would achieve via a traditional sale. However, this is far from guaranteed, and it’s just as likely that bargain hunters could place low bids, resulting in a disappointing final sale price.
      5. Fewer time wasters. You can bypass the “hobby” viewers and buyers who are “just browsing” to get an idea of what they want and can afford by selling at auction. Auctions typically attract serious buyers, including — although not exclusively — developers and investors.
      6. No risk of “gazundering”. If a buyer reduces their offer just before the exchange of contracts, making it hard for the seller to back out, this is known as “gazundering”. There is no risk of this happening at an auction. Once a bid is made and accepted, it cannot easily be amended.

      Property actuation FAQs

      What happens if a property doesn’t sell at auction UK?

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      Not every property sells when it goes into auction. According to EIG’s latest data, only 72% of the properties listed went on to sell, and this has been the trend over recent months.

      If your property doesn’t achieve its reserve price, the auctioneer will ask any interested parties to make their “best bid” and try to agree a sale with you. If you accept an offer, the sale will be done under auction conditions. That means the buyer must instantly pay their 10% deposit – or reservation fee if it is a modern method of auction.

      If you fail to sell, there are three main downsides.

      The “failed auction attempt” red flag – When you come to try and sell again you might find buyers offering less for your property. If they’ve done their homework they’ll see that the property failed to sell at auction and will likely think “if no one bought at this price, is it worth less?” or “is there something they know that I don’t?”.

      Costs – When selling at auction you’ll need your solicitor to prepare an auction pack (£200-£300) and pay an auction entry fee (£250-£500). You’ll be out of pocket with these direct costs, and there could be other indirect costs to consider. If you’re selling an empty/ex-rental then you’ll possibly have a mortgage, council tax and utilities to cover during the auction process – which can take 2-3 months to conclude. If you fail to sell at auction then these costs can drag on even longer.

      Impact on onward plans – If you’re selling auction, it will be for a reason. Usually it is because you’re trying to raise funds for other plans, so failing to sell can put a real spanner in the works.

      Can a property sell for less than the guide price?

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      At auction, it is unlikely that your property will sell for less for the guide price as it always set lower than your ‘reserve price’ – which is the lowest amount you are prepared to accept for your property. The only exception to this is if your property fails to sell at auction and you agree to a post-auction sale with an interested bidder.

       

      How accurate are auction estimates?

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      Auctioneers will value a property and recommend a guide price based on what they believe it will sell for at auction. They will be inclined to keep the guide price low as they want to attract bidders on your property. But the “10% rule” means they can only set the guide price up to 10% below your minimum acceptable price – your “reserve price”. It is generally noted that for properties that do sell at auction, they typically sell for around 15-20% more than the guide price.

      Top Tips for Selling at Auction

      At House Buyer Bureau we’ve got years of experience selling property at auction. Here are our top 5 Do’s and Don’ts:

      Click to view.

      At House Buyer Bureau we’ve got years of experience selling property at auction. Here are our top 5 Do’s and Don’ts:

      Do:

        1. It is essential you do your own research when choosing which auction house to use. Not all auction houses are the same. Check out their customer reviews, and ask what their ‘success rate’ is (what percentage of the properties they take on actually do sell, and for how much compared to the guide price).
        2. Make sure you choose the right type of auction for your property. If you have a ‘problem’ property,  you should use a traditional auction as it attracts more experienced cash buyers. If you have a ‘normal’ property then a modern auction is a good option – the longer completion time allows your buyer time to put a mortgage in place.
        3. Listen to the auctioneer expert when it comes to setting a ‘reserve price’. They know the importance of setting the right guide and reserve, so be guided by them but make sure you set a reserve that you’re happy to sell at if it comes to it.
        4. Work with your solicitor to present your property well to attract your target audience. If you’re selling a ‘fixer-upper’ then keep it tidy but don’t worry about repairs. If you’re aiming to sell to a first time buyer then go the extra mile and decorate and declutter to increase its appeal.
        5. Be prepared to negotiate if it fails to sell in auction. If there is interest but it doesn’t quite meet your reserve price, then it is often better to try and negotiate a sale via the auctioneer post-auction rather than risk waiting months to sell via another route. You don’t want future buyers to be cautious about your property because they can see it failed to sell before.

      What is a Quick House Sell Company?

      Quick house sale, house buying or “we buy any house” companies buy your property directly from you for cash in as little as seven days. There’s no need for estate agents or property viewings. This is the quickest way to sell a property. 

      Most quick house sale companies make their income by buying properties below market value and selling them higher. Many companies claim to be genuine cash house buyers but many either do not have the funds to buy your property outright or they will use dodgy sales tactics to force an unfairly low sale price. 

      Be sure to do your research to find the best quick house sale companies.

      How to Sell to a Quick House Sale Company?

      Each company will have their own process, but most companies operate similarly:

      • Fill out a short form — tell the company a little about your property. This is generally a quick and easy job you can do online.

      • Speak to the company — the company will call you to gather more detailed information about your property and find out whether a quick house sale is a good choice for you.

      • Receive a cash offer — this will be slightly below market value. House Buyer Bureau typically offers around 80 to 85% of the market value. But there are no estate agents fees to pay and no legal fees if you use one of our recommended solicitors.

      • Accept the offer — if you’re happy to proceed with the sale, you can formally accept the cash offer. Remember! Do your research before signing anything. Not all quick house sale companies are created equal. Some will try to tie you into a long contract to prevent you from changing your mind or selling to someone else. Others may make an outstanding cash offer, only to drop it at the last minute — if the offer seems too good to be true, it probably is!

      • Have a survey — the company will arrange for at least one survey of your property. As leading cash house buyers, House Buyer Bureau backs all its offers with a price promise. Unless something unexpected shows up in the survey, we will not reduce our original offer. On the rare occasion that we have to do so, we will give you £1,000 to keep, whether you go through with the sale or not.

      • Exchange contracts and complete the sale — some companies offer different routes to sale. House Buyer Bureau provides a quick cash sale route that you can complete in as little as 7-days and an investor route that takes around eight weeks but allows you to achieve a higher sale price.

      Unlike a traditional sale, there is no need for property viewings, and you can avoid estate agents and legal fees. Although your cash offer will be below market value, these cost savings are significant, so the difference between how much cash you walk away with when selling via a quick house sale company and how much you’d receive selling via an estate agent is probably less than you might think.

      House 4

      The Pros and Cons of Selling to a Quick House Sale Company

      As with property auctions, there are some things to consider before selling your house to a quick house sale company. People choose to sell this way for various reasons, from divorce and financial difficulties to ill health or the need to relocate quickly for work. Is a quick house sale right for you?

      Click to view.

      Pros

      1. A time scale that suits you — House Buyer Bureau can buy your house fast – in as little as 7 days. If you need longer, we will work to a time scale that suits you. We won’t rush you, but we can get things moving fast if you need us to! This flexibility offers the ultimate convenient and hassle-free house sale.
      2. A chain-free cash buyer — choose a genuine cash house buyer that has the funds to buy your house outright without securing financing or enlisting a third-party buyer. This way, you can avoid the expense and stress of property chain problems or a buyer who struggles to secure a mortgage.
      3. A guaranteed sale — this is the only way to guarantee a house sale. Once you accept a firm offer, there is no risk of the buyer changing their mind or finding another property they prefer, as often happens to people who sell on-market. This gives you peace of mind and enables you to plan your move with certainty.
      4. Sell a hard-to-sell property. “We buy any house” companies purchase properties of all types and in any condition. If you have a property you’re struggling to sell, a quick house sale could be the best solution.

      If you want to sell your house fast and need the peace of mind of a guaranteed sale, get in touch with us at House Buyer Bureau. One of our expert house buyers will be happy to talk through how a sale to us works and give you a free, no-obligation cash offer if you would like one.  

      Chris Hodgkinson

      Chris

      Chris

      Chris has worked in property all his career, first as a successful estate agent before spotting a gap in the market for buying property directly from people looking for a simple, quick sale.

      He has a passion for property and as an experienced valuer, has looked at well over 50,000 properties so far at HBB. He has extensive experience in property buying and regularly comments in the press on property matters, trends and promotes ways to simplify and speed up the selling process.

      View articles by Chris

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