Selling Property via Auction

Is selling your property via auction the right move for you?

You may be thinking through options for selling your house, and come across a property auction as one possible route. This is more popular for standard properties now than in the past, so it is worth considering, especially if you need to sell within a short period.

You can choose to use an estate agent in the normal way. The property auction process has changed over the years, to what is now called the “Modern Method of Auction” - this option allows interested parties to submit bids online over typically a 14-30 day period, before the auction closes and the highest bidder wins.

What does a seller have to do if selling a property via auction?

As the seller, you will have to provide a seller’s pack, which contains property details, searches, and sometimes a survey of the property, and interested parties must pay to receive this.

When the auction ends, the successful bidder will have to pay certain costs immediately: an auction/reservation fee of 2-5% of the purchase price; a deposit; and usually a contribution towards your legal fees. The reservation fee is on top of the purchase price, and is not payable to you as the seller, but to the auction house and sometimes the estate agent.

None of these costs is refundable if the buyer pulls out, therefore there is a greater likelihood of the sale completing than via the usual sale route, where buyers can change their minds and delay your sale.

However, if you change your mind for any reason, you are liable to refund any costs already incurred by the buyer.

Is the selling process for an auction property faster than a traditional property sale?

The buyer has 28 days to exchange contracts and a further 28 days to complete the purchase, which gives you greater certainty over the timescale of the sale.

What does it cost you as seller?

• If you use an estate agent, there will be fees to pay, although these may be lower than the standard fees.
• You pay for preparation of the seller’s pack
• You may have to contribute to the auction fee, or it may be borne entirely by the buyer
• As for any property sale, you will have solicitors’ costs to pay

It is important to fully understand the costs involved before opting for the auction route.

This method has the advantages of increased speed of sale and increased likelihood of the sale completing; but may result in your property selling at less than its full market value. If you are in a hurry to move, or you like to have greater certainty, it may still be worth taking this route.

Make an informed decision so you can enjoy the process.

In short, it is important that you book an appointment and talk with your 2mtrust Financial Adviser, like Catherine Bockett, to get expert input before making a decision. We have first-hand experience of clients getting excited about an auction property, only to find out too late that the unexpected additional fees (on top of their bid) make it more expensive than they initially anticipated.

2mtrust Financial Advisers will be able to explain the process, support you through the journey if you go ahead and ensure the process is as smooth as possible for you from start to finish – and help you avoid potential costly surprises!

We love helping our clients find their dream home, enjoy their life and plan for their financial future.