Like anything in life, there are a number of advantages and disadvantages of selling your property at auction. We’ll be discussing both, taking into consideration how this method can benefit some people more than others.
As estate agents, we understand that sometimes people choose to take different routes when selling their homes. It would be naive not to acknowledge that but we also think it’s our duty to inform you of the realities of other methods. In today’s blog post, we’ll be discussing the benefits of selling your property at auction. You’ll also discover what the drawbacks can be and when certain circumstances make it more appropriate.
The basics of selling a property at auction
First things first, let’s run through the basics. If you’ve already considered selling your home via an auction then you might want to skip this part, but if not, here’s what you need to know:
- There are countless auction houses around the UK so find one that appeals to you
- Your house will undergo an auction appraisal to see how much you could get for it
- You’ll then instruct your chosen company to auction your property
- You’ll receive a legal pack and your house will usually be marketed by the company
- A reserve price will be decided and put on your property
- At auction day, people will bid on your property and once the reserve price has been met, you’re legally required to go through with the sale
- Whoever places the winning bid is also legally obligated to buy your home
- You’ll still need a solicitor to oversee the transaction
So, now you know the basic process you’ll go through if you decide to auction your home. But what are the advantages and disadvantages of selling a property at auction?
Advantages of selling your property at auction
It’s a well-known fact that choosing to sell your property through an auction can often by a much quicker process than traditional routes. The auction company will have a set date for your home to be open to bidders and it’s unlikely this will change. Plus, once your property has been sold, the buyer must put down a 10% deposit straightaway and pay the leftover 90% within a month. These strict guidelines automatically make an auction quicker than other routes – there’s less freedom to change minds and alter dates.
Another advantage is that buyers cannot pull out. We know that this has become a problem in the UK housing market, with more sales falling through than ever in 2018. However, selling a property at auction means there are legal procedures protecting you once the hammer has gone down.
Lastly, the entire process can be quite exciting to some people. You and your auction company will decide on the guide price and reserve price together, but if your property is popular then a ‘bidding war’ can take place – meaning you could end up selling for a price far higher than you first expected.
Disadvantages of selling your property at auction
However, as you can probably imagine, there are also disadvantages of selling at auction. As we said, the bidding process can be exciting but for some people, it is particularly daunting. Fear of the unknown often puts people off and we’d say it’s definitely a con that you aren’t guaranteed a sale at auction. And that means losing out on your auction fees. This can actually be more stressful for certain kinds of people.
This leads us to our next point: it’s costly. Selling at auction can be a more expensive route than using an estate agent and again, if you don’t sell, you’ll lose your fees. Whereas with an estate agent, they will continue to market your home until it’s sold and you’ll pay a one-time fee. You may also end up getting less than you really wanted for your home at auction. After all, if it meets its reserve price at auction, you’ll have to sell and there’s no way to see if you could have sold it for more. It’ll be too late!
Obviously, there are an equal amount of pros and cons. However, it’s really up to you, the individual buyer to decide what’s best. In certain circumstances, an auction can really pay off. For example, you may need a really fast house sale and aren’t worried about getting the highest price. If you’re more concerned with getting the right price, however, and don’t mind a longer process, an estate agent might suit you better.