To sell a property at auction you need to source an auction house, have the property valued and pay any associated fees.
In short, to sell a property at auction, there are multiple steps to complete before the hammer falls.
If you’re selling a property that’s hard to market and you don’t want to sell it at auction, contact Swift Capital today to chat through your options and get a speedy offer.
Is It Worth Selling A House At Auction In The UK?
Selling a property at auction tends to be best for properties that need to be sold quickly, require a lot of refurbishment, or won’t appear as attractive on the market.
This is because auction properties are usually priced below market value. In general, auctions are designed to help sellers sell quickly – so it’s a great option if you want to get rid of the property fast.
However, it is important to factor in the costs associated with taking a property to sell at auction.
How Much Does It Cost To Sell A Property At Auction In The UK?
This depends on the value of your property. For example, if your property is valued at £200,000, an estimated total amount could sit around £6,930.
The cost to sell a property at auction includes:
Auctioneer’s commission: this is usually around 2-2.5%+VAT of the final sale price.
Legals: this can vary between £200-£400+ depending on who your solicitors are.
Entry or admin fees: depending on the auction house, these can cost £300-600+, and often include the cost of marketing your property.
EPC: If you need one, getting a new EPC (energy) certificate can cost between £60 to £120.
Who Pays Auction Fees, The Buyer or The Seller?
Both the seller and the buyer are required to pay fees when selling or buying a property at auction.
For the seller, this covers the costs outlined above. In some cases, sellers can pass costs to the buyer, but this is something that is determined by the terms and conditions of the auction house.
Buyers will usually pay an administration fee to the auction house and a deposit (usually 10% of the purchase price) on the day of the auction.
How To Sell A Property Through An Auction
The process of selling a property at auction is very straightforward, you will need to:
1. Find The Auction House For You
Look into local auctioneers to find the one that suits you best and sits within your budget. They will then conduct a formal appraisal of your property to give an estimate of what price they expect it to reach at auction.
2. Agree Financials
You will agree to two different prices with the auction house before the auction.
Reserve Price: This is an agreed minimum sale price that you are willing to accept at auction. This is not shown to the bidders on auction day. It provides some protection so the property is not sold lower than you want. If the bidding doesn’t match the reserve price, the property does not get sold.
Guide Price: This is publicly advertised, providing bidders with an idea of the property’s predicted value. It could change based on the level of interest or feedback.
3. Formalise The Process
You are required to have two sets of official documents before going ahead at auction.
Auction Agency Agreement: Prepared by the auction house, this outlines the dates, fees and both reserve and guide prices.
Legal Pack: This will need to be prepared by a solicitor and will include title deeds, searches, leases and any relevant tenant documents. This is an upfront cost you will need to cover.
4. Decide Your Time To Market
Auction houses will list your property in various places such as catalogues, online platforms, email and in the press to generate as much awareness as possible. You may also be required to offer viewings either in person or via livestream.
5. Take It To Auction!
Auctions can take place online, live in person or via a hybrid model of both. If accepted, buyers are required to pay a non-refundable deposit, which makes the sale legally binding.
6. Complete
There is a standard completion period after the auction. This can be up to 28 days if the property doesn’t have any legal complexities. The final settlement and transfer will need to be managed by your legal team.
If you have a property that you are struggling to sell, contact Swift Capital today for a quick valuation and offer.
Do You Need A Solicitor To Sell A House At Auction?
Yes. They will need to provide the legal pack as well as manage the sale once the offer has been accepted by you and the auction house.
What Are The Disadvantages Of Selling A Property At Auction?
The main risk of selling at auction is that your property might not sell at all.
This often happens when the reserve price isn’t met on the day. Beyond that, there are other things to consider, like tight deadlines, seller fees that still apply even if the sale doesn’t go through, and a limited pool of potential buyers.
Most auction bidders tend to be cash buyers, developers or investors, as auction buys must be completed within 28 days.
Because banks often consider auction properties higher risk, mortgages are rarely used in these cases. This means you’re narrowing your audience to buyers who are ready with cash, which can make the sale more difficult and increase your chances of coming away empty-handed.
How Much Less Do Properties Sell For At Auction?
In general, when you sell a property at auction, it can sell for up to 20% less than the market value. This is determined by the state of the property, any legal issues associated with the property, or if you require an immediate sale.
If you want a quick sale, any auction house will encourage you to set the price as low as possible to increase demand.
Can You Sell A House At Auction With A Mortgage?
Yes, you can. But the full value of the mortgage must be covered by the sale, and the lender must be repaid before the buyer takes legal ownership.
You will also need to cover the difference if the sale doesn’t meet your total mortgage. It is worth contacting your mortgage lender to check for any early repayment charges if you are successful.
What Happens If A Property Doesn’t Sell At Auction In The UK?
You have a few options if you fail to sell a property at auction.
You could:
Approach the highest bidder immediately after for a private sale.
Adjust either the reserve or guide price and relist in a future auction.
Withdraw the property and contact a quick sale company like Swift Capital.
Note, even if the property does not sell, you may still need to cover the cost of listing the property and any legal advice you have received.
Selling A Property At Auction
Selling a property at auction can be a great way to make a quick sale. However, it can also mean a lower price, extra fees and a limited pool of buyers.
If you are looking for alternative options, or you have a property that is proving hard to sell, contact Swift Capital at enquiries@swiftcapital.co.uk to discuss your options today.