If you are thinking of selling your property or land at auction, you’re not alone. Around 18,000-20,000 homes sell by auction each year (and that’s just residential properties).
Our online auction offers an opportunity for everyone to bid on lots of exciting properties from the comfort of their own home. Whether you are looking specifically to secure a residential property, or your next commercial opportunity, our online property auctions offer a wide variety of options for numerous different needs and budgets.
All our auction properties are available to view here
Selling a property at auction is often the best route to sell quickly and to achieve the best possible price on the day. Having said that, if you’ve never bought or sold at auction, it may initially feel like a daunting prospect.
Here at The Purple Property Shop, we demystify the process of selling your property by auction so that you can assess whether it is the right choice for you.
Below, we explore some of the common questions that potential sellers ask and document all you need to know about selling by auction.
Why sell your property at auction?
Anyone who has sold a property in the UK knows that the traditional process of selling can be full of potential pitfalls, with numerous parties involved. There are many situations in which selling a property at auction is more suitable than the traditional route – especially if you want to achieve the highest possible price in the quickest possible time!
You can achieve the best price
If your property has the right mix of attributes (i.e. a great location, the possibility to improve and the potential for great rental yields), you just might achieve a higher price than you expected. Auctions are competitive by nature and require quick, instinctive decisions and when there are more potential buyers for a property – this may drive the price up.
The whole point of entering land and property into an auction is not to find just one potential buyer, but to find several all at the same time and then allow them to bid competitively and transparently to achieve the best possible price.
No Estate Agency Fees to Pay
For a traditional sale, the seller pays the Estate Agent’s fee (typically 1.2% of the selling price including VAT.) This means that the average Estate Agent’s fee for a property selling for £250,000 would be £3,000 including VAT.
Our Auction model turns the traditional estate agency transaction on its head and instead of the seller paying the fee, the buyer pays a non-refundable reservation fee from which the auctioneers and estate agents are paid. This means that there is no fee to pay for the seller, saving the seller an average of £3,000.
You can complete on the sale of your property often within 56 days
You may be in a situation in which you need to sell your property quickly. For example, you may be relocating for work, downsizing or in need of access to funds to address other personal matters.
In this case, an auction is ideal as exchange and completion MUST happen within a predetermined time frame. You’ll effectively exchange contracts on the day of purchase and the completion date can be in as little as 56 days. If not, the buyer may lose their deposit or incur fees and penalties, giving buyers an incentive to move quickly.
You can sell with certainty
Unlike a traditional private treaty sale, the risk of a sale fall through is avoided with the auction process. Once a buyer commits to bidding on a property and the reserve price is met or exceeded they’re legally obligated to complete the purchase. As the sale will happen on a definite date, you can safely make plans without the fear of a looming disaster and a failed sale.
Auctions have a high sales rate
The average success rate at auction is as high as 75%-80, meaning there is a very high chance that your property will successfully sell. Traditionally, a non-auction seller may be waiting for months to find a suitable buyer.
High Transparency
Due to the open nature of auctions, the process is very transparent, with a lower number of ‘middlemen.’ For sellers, you will know how many people are interested in your property and for buyers you will be privy to how many other buyers you are competing with, because when you sell a house at auction, everyone can see when someone is bidding and the amount they are bidding. You’ll be able to keep track of exactly how bidding progresses.
There is a buyer for every type of property
Auctions are ideal when you have a property that is unique or difficult to value, or one that appeals to a broader audience.
This also extends to the condition of your property. An auction property may have fire damage or be in need of complete renovation, which may seemingly make the property difficult to sell. However, we’ve seen that there are buyers for every type of property regardless of the condition of the property.
You can set a reserve price
At The Purple Property Shop we’re often asked whether the property will end up selling for significantly less than expected. This is never a concern as your property will have a previously agreed reserve price. A reserve price in a property auction is the minimum price that you, the seller, are willing to accept for the property being auctioned. This price is typically set before the auction begins and is kept confidential from the bidders. The auctioneer will continue to solicit higher bids until either the reserve price is met or the bidding stops. If the highest bid at the end of the auction does not meet the reserve price, the property will not be sold, and the seller is not obligated to accept any of the bids.
The buyers are ready to purchase
Selling a house at auction gives you access to ‘hungry’ buyers who are ready to move. Auction buyers are typically looking for a variety of different properties. These may be; fixer-uppers, investments, unusual or unique opportunities and land of all descriptions.
The main attraction for sellers is much the same as buyers – speed, transparency and surety of sale. This means that buyers are ready to go with funds and finances already in place. It’s also unlikely that a buyer will be purchasing the property with funds from another sale – which aids the speed of the transaction.
Risks associated with selling a property at auction
Of course, there are risks associated with any house purchase transaction, however, selling via auction in the UK is a fairly low-risk strategy. The main risk is that the property may not sell – although sales rates are high (between 75% and 80% as previously explained), there is a percentage of properties that will not sell (generally around 20%).
This could be due to market conditions, the type of property that you’re selling or simply the timing of bringing the property to market. This could also be due to a high reserve price or other administrative issues such as documentation not being available in time for auction day.
To minimise this, our experienced team are on hand to guide you through the process and equip buyers with everything they need to make a sound buying decision. We’ll also advise you on a suitable reserve price and how to get the very best price for your property.
