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How to Sell Your House at Auction

Written by Reviewed by Graham Norwood

18th May 2020 (Last updated on 25th Nov 2020) 11 minute read

When it comes to selling your home, not everyone thinks about selling at auction. Usually, properties in good condition are sold on the mainstream market (formally called ‘by private treaty’) via estate agents; these usually fetch higher prices than they would at auction. 

That said, an auction provides the opportunity to sell a home which is in a poor or “unmortgageable” condition and in these cases, you may also receive a higher price for your property than via a more traditional selling route. An auction also allows for a quicker sale. However, before committing to selling at auction, you will want to have a solid idea of what the process entails. 

Compare My Move work with property and legal experts to bring you the best advice when it comes to selling your home. From the fees you’ll need to pay, to whether your home is suitable for an auction house, our guide will prepare you for selling your home at auction.

This article will cover the following:
  1. What is an Auction?
  2. Is Your Property Suitable for an Auction?
  3. Why Sell Your House at Auction?
  4. Do I Need a Conveyancer When Selling a House at Auction?
  5. Reserve Price vs. Guide Price
  6. How Does the Auction Process Work?
  7. How to Find and Choose an Auction House
  8. How Much Does Selling at Auction Cost?
  9. How Long Does It Take to Sell a House at Auction?
  10. Compare Conveyancers with Compare My Move

What is an Auction?

An auction is a process of selling an item, in this case, a property, by bids. The winner of the auction is whoever submits that highest bid. There is usually a set starting price for the item (the reserve price) and, perhaps unsurprisingly, the more desirable an item is, the more it is likely to receive multiple bids, therefore increasing the price it sells for.

Is Your Property Suitable for an Auction?

Auctions are ideal for properties which are difficult to value. Unusual and dilapidated properties can attract experienced landlords, developers or anyone looking for a “fixer-upper” project who aren’t put off by problems. Many are actively looking for renovation projects they can add value to. 

An auction is also one way of selling your Buy-to-Let property, as other landlords will be looking to add to their portfolio. A property with sitting tenants also means that the new owner can collect rent from day one.

Houses sold at auction are often properties which cannot be or would not fare well if sold through a traditional method. “Unmortgageable” homes or homes in poor condition can do well at auction, far better than if sold via an estate agent.

With this in mind, if your home is in great condition and a solid investment, you may not get the amount you want for it at auction, with many bidders looking for a project at a bargain price. In this case, selling at auction would not be for you.

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Why Sell Your House at Auction?

Selling your house at auction is ideal if you’re looking for a quick sale for a property in less than desirable condition. Auction House UK state that selling a house via auction can take as little as 8 weeks from the initial enquiry to sale. This is largely due to the fact that the buyer is required to pay 10% of the price on the day of the auction and must provide the remaining amount within 28 days. 

Another reason sellers look to auction houses is the prospect of a bigger sale price, with the hope that a bidding war could boost the selling price. Despite not being the conventional method of selling a property, there has been a peak in interest for property auctions. Auction House reported that 2019 was its most successful year to date, selling more than 3,800 lots across the UK from its network of 40 regional salerooms, at an increased success rate of 77.3%.

Many auction-bidders, such as developers, builders or those looking for a project, are on the lookout for a “fixer-upper”. This is ideal if your property is considered “unmortgageable” due to its condition - for example, if it has subsidence or has been empty for many years. 

Advantages vs. Disadvantages of Selling Your House at Auction

Some houses are better suited to an auction than others. It is also the case that some sellers will feel happier selling their property at auction than others, with the main concern being the risk of the house selling at less than market value. Below we’ve outlined the advantages and disadvantages of selling your house at auction:

AdvantagesDisadvantages 

A quicker sale and process

Bidders are looking for a bargain

Certainty - the sale is legally binding once the hammer falls

Auctioneer fees can be higher than that of high street estate agents

An “unmortgageable” home may fare better at auction

Once the auction has ended, you are legally obliged to sell the house for what it sold for - regardless of whether you are happy with the amount

No property chain

Your property may fetch higher at auction than with a traditional high street agent

Do I Need a Conveyancer When Selling a House at Auction?

Yes, enlisting the services of a good conveyancing solicitor is crucial to selling your house at auction. It is especially important to find the right conveyancer for you and work with a solicitor who is experienced in your kind of property sale, including your type of house and selling at auction. 

Your conveyancer will need to be part of the process early on as they will need sufficient time to prepare the pre-auction legal pack required, in addition to any other legal work required before the auction takes place. Once the hammer falls at the end of the auction, the buyer is legally committed to the purchase. Your solicitor will handle all the legal aspects and details of the sale from this point onwards, liaising with the buyer’s solicitor. 

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Reserve Price vs. Guide Price

There is a crucial difference between the reserve price and the guide price and both will need to be thought out carefully with the auction house. The reserve price will be the lowest price you are willing to accept for your property. You want to ensure you don’t price this too high, which could put off potential bidders, but you also want to be prepared for your house to sell at this amount and therefore be content with this amount. It’s important to note that this could be 70-80% of the market value. 

The guide price, on the other hand, is what you hope bidders will bid up to - or higher. This is a marketing figure, used to guide potential buyers as to how much the property may be worth. Be aware that this is not the figure that the property will necessarily sell for as the sale will be dependent on the bidding on the day of the auction. 

How Does the Auction Process Work?

Once you have decided on selling your house at auction, and at which auction house, it is vital that you are clear on the process before proceeding. Selling a house at an auction will differ in many ways compared to selling a home through an estate agent. Below we look at the key steps in the process:

Appraisal

An appraisal is when an approved auction valuer assesses your property, outlining how much you can expect to sell it for. As part of this process, they will be able to advise you with regard to a reserve price, to ensure your home isn’t sold off for a substantially lower price. If the reserve is not reached in the auction, the property is withdrawn.

There is no obligation to go ahead with the auction at this stage. Use this as an opportunity to ask as many questions as possible and get an idea if auctioning is the right move for you. 

Instruction

Once you have decided to go ahead with your chosen auction house, you will be asked to sign terms and conditions ahead of the auction. At this point, you will need to provide all certification and documentation required to sell your home - your conveyancing solicitor will help ensure you have all paperwork sorted. A draft description of your property will be sent to you prior to marketing your property. 

Legal

Make sure you hire a conveyancing solicitor to handle the legal side of the house sale in preparation for the end of auction where the rights of the property will be handed over to the highest bidder. Be sure to compare conveyancers so that you get the best deal. 

Marketing

Ideally, you want to work with auctioneers with the best marketing tactics in the profession. Features in specialist publications, newspapers and details in their auction catalogue and on their website will reach a wide selection of potential bidders. The success of the auction will largely depend on having the most potential buyers in the room on the day of the sale.

Reserve price

Taking into account the advice from the appraisal, set a reasonable fixed reserve price to entice buyers. You want to make sure your house doesn’t sell for below it’s worth. However, bidders may be put off by a high reserve price so keep this in mind. 

Auction day

On the day of the auction, potential bidders will register and the auction house will run checks and take copies of identification. The bids will start at your set reserve price and bidders can bid upwards from there. 

As soon as the auction is over, contracts are usually exchanged immediately with the winning bidder paying 10%. There is no requirement for the seller to attend the auction itself. 

Completion

Once the auctioneer’s gavel falls, a binding contract is effected. At this point, the buyer is required to pay 10% of the property price immediately, with the remaining 90% to be paid within 28 days of the auction date.

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How to Find and Choose an Auction House

The first step is to do your research on a variety of auction houses, from small and local auctioneers to the bigger name businesses. Some of the bigger and more established auction houses may come with larger fees. However, their reputation, knowledge and database of potential bidders may well be worth the higher cost. 

That said, smaller and local auction houses may have lower fees and will potentially be more flexible than an established auction house, so make sure you explore both options. 

It is also worth researching auctioneers which specialise in the type of property you are selling, be it size, era or condition. Look at upcoming auctions to find an auction house which is known for selling properties like yours. The ideal auction house for you will need to have good and recent experience in selling similar properties. 

Contact auction houses and provide them with a description of your property. They will then be able to tell you if your property is suitable for auction and discuss a reserve price. At this point, the auctioneers will arrange to inspect your property.

Increasingly, auction houses also operate ‘virtual auctions’ allowing internet bidders as well as those in the physical auction room itself; it’s been judged that around 10% of homes sell to online bidders so check your chosen auctioneer includes this service.

How Much Does Selling at Auction Cost?

When it comes to selling your house at auction, you will need to be prepared for the costs involved, including auctioneer and solicitors fees. Make sure you factor these in when reviewing the cost of selling your home and be aware that the auctioneer will take a percentage of the sale of your property.

Auctioneer Fees

On average the auctioneer will take 2.5% of the sale price. This is often higher than the average fee for a traditional high street estate agent. This high cost for selling your home is another reason to set a realistic but solid reserve price for your home, to ensure the costs are covered. 

Be aware that there may be additional advertising and marketing fees associated with the auction so make sure you are clear on all costs involved before proceeding. It is also worth noting that an auction house may take a fee even if the house doesn’t sell. 

Solicitor Fees

You will need to hire a conveyancing solicitor as part of the house selling process. These fees will entirely depend on your chosen solicitor but can cost between £350 to £500 to produce a pre-auction legal pack which includes the title plan, lease details and any other vital information required for the sale.

Following the auction, you will be required to pay your solicitor a fee for the conveyancing in order to complete the sale. Depending on the price your property sells for, these fees can range between £450 and £750 plus VAT. 

How Long Does It Take to Sell a House at Auction?

Selling a house at auction can often be quicker than selling your home via a more traditional route. In some cases, it may be as quick as two months. Your property must be up for auction at least six weeks in advance and the full sale should take 28 days from the auction itself.  

Around 80% of properties sell at auction; most of the remaining 20% fail to sell because bids have not reached the reserve. In many cases, the properties return to a future auction to try again.

Compare Conveyancers with Compare My Move

When selling your home at auction, you’ll want to know you have the best legal advice at your disposal. Save up to 70% off your conveyancing fees when you compare Conveyancers with Compare My Move.

Adele MacGregor

Having written for PerformanceIN, WalesOnline, Grazia Magazine and The Olive Press, Adele now writes advice articles for home movers, first-time buyers and house sellers alike.

Graham Norwood

Reviewed by Graham Norwood

Property Journalist and Editor,

With over 15 years of experience in residential property journalism, Graham is currently the editor for both Estate Agent Today and Letting Agent Today.