Homes Under the Hammer: Selling a Property at Auction

 

Buying or selling a house at auction is becoming an increasingly popular alternative to the traditional route. In August last year it was estimated that 5% of properties are being bought through an auction…and the figure is set to rise!

Any property can potentially be sold at auction but there are some properties that are more suitable to the expedited process, such as homes needing renovation/developing/modernisation (usually bought by professional property developers), probate sales and “problem” properties that may be difficult to shift using traditional marketing methods.

Selling at Auction

The process of selling a property at auction is relatively straight forward. Firstly, you must confirm instructions with the auctioneer about 6 weeks before the auction. This allows them enough time to market the property effectively and gain as much interest from potential bidders as possible.

You then need to instruct a solicitor. The solicitor will prepare a legal pack for the property and then send it to the auctioneer.

The legal pack will contain details of the title, search results, any Certificates, Guarantees or other relevant documents related to the property such as existing indemnity policies etc and an Energy Performance Certificate.

The auctioneer will then hand out the legal pack to any interested parties prior to the auction.

Before the day of the auction you must set a reserve price for the minimum amount you would be willing to accept for the property. This price does not have to match the auctioneer’s guide price and the potential buyers usually will not have any knowledge of the reserve price set.

If the reserve price is met by a bidder on the night of the auction, they will then be expected to sign the Contract and pay the 10% deposit there and then.

The completion date is then set. This is usually 28 days after the auction (or sooner!). Your instructed solicitor will then do all the necessary preparations leading up to the agreed completion date.

Advantages and Disadvantages

The advantages as a seller at auction certainly outweigh the disadvantages:

  • the process is considerably faster than the traditional house selling method
  • buyer is usually a cash buyer and therefore you do not have any issues with lenders holding up the process
  • no chain to collapse
  • little/no chance of buyer pulling out

However, the main disadvantage is that you may not get as much for the property as it would be potentially worth on the open market.

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