Selling a house at auction can bring several advantages for sellers. And, if you've ever seen an episode of TV show Homes Under the Hammer, you'll know it can also be very exciting. But before you get caught up in the thrill of it all, read on for our guide and top tips on selling at auction.
Property auctions take a lot of uncertainty out of the selling process. Once the hammer falls, the sale is legal and binding. The buyer must pay a 10% deposit right away and the remaining 90% within a month. Selling at auction can drive up the price of your property if potential buyers get into a bidding war. However, if there's not much demand in the auction hall, your property could sell for less than market value.
Who should sell at auction?
Selling at auction works best for:
- Doer-uppers: some people attend property auctions looking for renovation projects. If your home is in poor repair, you could get more money by selling it at auction.
- Quirky properties: unconventional properties aren't always straightforward to value, but often bidders are quick to see your home's worth.
- Fast sales: auctions are a good way to sell your property quickly, for example if you’re planning an immediate move abroad.
Choosing an auctioneer
There are lots of dedicated auction houses around, so do your research. Check out their websites and marketing materials to see how well they advertise properties, and look online for recommendations from previous customers. Established names are likely to have the biggest customer base, and the more eyes your home gets, the higher the chance of a bidding war.
You'll need to sit down with your chosen auctioneer and decide on your reserve price: this is the lowest price you'll take. You'll also need to establish a guide price – the starting point for bidding. Keep it low enough to get people interested, but not too low to put them off.
Price and budget
The costs of selling at auction vary, but you'll usually be expected to pay about 2.5% of the purchase price. Some auctioneers might ask you to pay advertising and legal costs too. You'll also need to speak to your own lawyer. They'll draw up contracts and confirm any special conditions of the sale.