Selling Your House at Auction: Everything You Need to Know

Curious about the process behind those dramatic residential property auctions you've seen on TV? Wondering why some homeowners opt for this method of selling? Let's dive into the intricacies of selling a house at auction and explore whether it might be the right choice for you.

How Do House Auctions Work?

Selling a house at auction is a multi-step process that typically spans several months. First, the auction house compiles a marketing catalogue, usually released two to three weeks before the auction date. Prospective buyers can then schedule viewings, conduct early-stage surveys, arrange open houses and request legal packs to better understand the property's details.

Each property listed in the catalogue comes with a guide price, representing its estimated market value. Sellers have the option to set a reserve price, the minimum amount they're willing to accept, which is usually kept confidential.

Can Your House Be Auctioned?

While not every property is suitable for auction, houses with unique challenges or properties requiring significant renovations often find success in this format. Auction buyers and developers may be more open to investing in properties that traditional buyers might overlook.

Selling A Property at Auction

If you decide to sell your house at auction, you'll need to select an auction house to work with. It's advisable to choose one affiliated with the National Association of Valuers and Auctioneers (NAVA) for adherence to industry standards.

Auctions can be held in person or online, with buyers receiving bidding numbers for identification. On auction day, buyers bid on properties, with successful bids requiring a 10% deposit upfront and the remaining 90% within 28 days.

How much does it cost to sell a house at auction?

Selling at auction incurs various fees, including entry fees, auction commissions, legal pack expenses, conveyancing fees, and potential stamp duty as explained below. While these costs are transparent, sellers should weigh them against the potential benefits of auctioning their property.

Entry Fee

When you decide to sell your property at auction, you'll typically encounter an entry fee charged by the auction house. This fee varies between auction houses but is usually payable at the time you instruct them to sell your property. In some cases, such as probate properties, this fee can be deferred until after the sale.

Auction Commission

One of the significant costs associated with selling your house at auction is the commission owed to the auction house. Most auctioneers charge a commission of around 2.5% of the sale price, plus VAT. Additionally, the auction house may levy charges for advertising and marketing your property in its catalogue.

Auction Legal Pack

Before auctioning your house, your solicitor will need to prepare a legal pack containing essential information for potential buyers. This pack typically includes details such as lease information (for leasehold properties), the title plan, and confirmation of the plot size.

Conveyancing Fees

Once you've chosen a solicitor to manage the sale of your house at auction, you'll be responsible for covering their conveyancing fees once the sale is completed.

Legal Fees

Various legal fees, including the solicitor's administrative costs, are standard components of the conveyancing process when selling a property at auction.

Stamp Duty and Other Taxes

Buyers are typically responsible for paying stamp duty as part of the purchase process. This may influence your decision-making when setting your guide price for the auction.

Online House Auctions

Online auctions have gained popularity, especially during times of restricted in-person gatherings. Sellers can participate in rolling or scheduled online events, mirroring traditional auctions with reserve and guide prices.

What If Your Property Doesn't Sell?

Properties that don't meet the reserve price become unsold lots. However, the auction house may still facilitate post-auction sales negotiations with interested buyers.

Is Auctioning Your House Right for You?

Considering selling your house at auction? Here are some key factors to ponder:

1. Urgency:

Are you in urgent need of a quick sale, perhaps due to probate or to fund another property investment?

2. Property Condition:

Does your property require significant refurbishment, modernization, or repair work?

3. Commercial Demand:

Could your property attract commercial interest due to its location or unique features?

4. Niche Appeal:

Does your property possess characteristics that might appeal to a specialized market segment?

Pros of Property Auctions:

Streamlined Process: Auctions ensure a chain-free sale, simplifying the transaction.

Timely Completion: Buyers are legally bound to finalize the purchase within 28 days.

Renovation Opportunities: Properties in need of extensive work often perform well at auctions.

Potential for Higher Prices: Competitive bidding can drive up sale prices.

Cons of Property Auctions:

Fee Liability: Unsold properties still incur auction and solicitor fees.

Higher Commission: Auctioneer fees can be higher than traditional estate agent commissions.

Immediate Vacancy: You may need to vacate the property swiftly upon sale.

Finality: Once sold at auction, there's no room for negotiation or reconsideration.

Expert Tips for Auction Sellers

Set a realistic reserve price, ensure accurate property listings, choose a reputable auction house, and present your property in the best possible light during viewings.

Get Started with Felicity J. Lord

If you're exploring alternatives to traditional estate agency sales, Felicity J. Lord can guide you through the auction process. With coverage across England and Wales, our property professionals offer comprehensive support to help you achieve your selling goals.

Get a free initial property valuation and discover our tailored selling solutions today!