Selling Your House at Auction
For homeowners in a hurry to sell, selling a house at auction can be much quicker than selling on the open market. The whole process, from registering with an auction house to completion of the sale, can take place within two months.
Deciding to Sell at AuctionBefore putting a house up for auction the owner should make sure they know how much it is worth. The property should be valued so that a realistic reserve price can be set. The reserve price is a pre-set price below which the vendor does not want the property to be sold.
Choosing an auction house may seem like a daunting prospect especially if someone has no previous experience of auctions. Ideally the auction house should be experienced at selling a wide range of properties including many properties which are similar to the house to be sold.
Before the AuctionOnce an auction house has been chosen an agreement will be reached setting out how much commission will be paid if the property is sold. The vendor may have to cover additional expenses such as advertising the property in the auction brochure. All such expenses should be discussed prior to entering into the agreement.
Most people who buy property at auctions will already know which property, or properties, they will be bidding for before the day of the auction. The vendor will have to open the house to be viewed by prospective purchasers. Because a binding agreement may be formed on the day of the auction, interested parties may also to want to carry out surveys or bring in builders or architects.
The vendor should retain solicitors who will draw up a contract of sale in anticipation of the auction.
The AuctionOn the day of the auction your home may be one of hundreds of properties to be auctioned. The auction could go on all day. The property will have been allocated a lot number and the auction house may give a rough estimate of when a particular lot is likely to be offered for sale.
The role of the auctioneer is important – a good auctioneer can whip up interest and increase the price that bidders are prepared to offer. When a lot comes up for sale the auctioneer will begin by describing the property and a photograph may be displayed. Having whetted the bidders’ appetites, the auctioneer may then suggest a starting price for bids. This is not the same as the reserve price and is likely to be very much lower than the value of the property.
The Bidding ProcessIf there is interest in the property the bids will now start. There is no set pattern for the bidding process. Sometimes auctions which start slowly still end in a high price being achieved by the property.
Many people believe that property sold at auction always goes for a discounted price. This may not be the case at all. If more than one bidder is seriously interested in the same property this can lead to the price being pushed up as they battle it out. Sometimes properties which are hard to sell through an estate agent find their market and get a good price when sold at auction.
When the auctioneer decides that the bids have dried up he will give a final opportunity for any more bids and then bring down his hammer. At this stage the highest bidder has secured the property - a legally binding agreement for sale has been reached. Immediately after the auction the highest bidder must pay the deposit.
If the final bid does not match the reserve price set by the vendor the auctioneer will announce that the property is “not sold” as he brings down his hammer.