More and more people these days are selling property at auction. And it’s not just property developers that are buying them there either. As the process of selling a property at auction becomes so much more transparent – thanks to the many property refurbishment shows on TV these days – selling at auction isn’t as foreign to the man (or woman) on the street as it used to be.
In fact, many people find the process pretty exciting, especially the potential to be on the receiving end of a bidding war. Who doesn’t want as much money for their property as they can muster?
Refurbishment prospects with auction property
The majority of properties that sell at auction though tend to be those that need quite a bit of work to be done to them. It could be that the property has been inherited from an elderly relative and hasn’t had much upgrading in decades. The family perhaps live far away and don’t have the time – nor the inclination – to renovate it themselves. And, the house may be in need of too much refurbishment to put it on the open market. In this case, of then the best idea is to sell at auction to a property developer interested in a ‘doer upper’ property.
Then again, it could be that the house owner just wants a quick sale for whatever reason ie he or she is relocating abroad for work or it’s a couple who have separated and simply want the cash to be able to move on in life on an individual basis.
A common reason for houses appearing at auction is because it has been repossessed and the bank or other lender just want to sell it and move on. Unfortunately, due to the tight financial circumstances for many companies brought on by the pandemic where they had to make staff redundant, there will no doubt be more of these cases in the coming months and years.
So, why should you sell at auction? What are the top reasons why people opt to put a property under the hammer rather than present it to a wide-smiling estate agent?
Top reasons to use an auction house to sell property
There’s no hanging around
Once a property has been advertised and appears at auction, it’s ready to be sold that day. That’s because once the hammer goes down, the sale is legally binding – otherwise the buyer will have to pay your auction fees and he or she will lose their deposit.
The buyer will pay the deposit that day – usually around 10% of the full value of the property – and then settle the rest of the payment up to 20 days later.
You set an initial reserve price
You can tell the auctioneer the lowest amount for the property that you are prepared to settle for. If it doesn’t reach it, then you’ve lost nothing (although you still have the property and will have to think of another way to market it – or be prepared to lower the price, embark on a private sale etc).
You may get more money than you think
Auctions present an excellent opportunity in the form of a potential bidding war. This happens if more than one person likes the property you’ve listed and bid against each other, pushing the price up each time. The result could be a figure far higher than you initially expected or even hoped for. And, yes, this is the excitement of auctions…
You have the right audience standing there
As we mentioned, auctions regularly attract property investors. For many people involved in property buying a run-down house and refurbishing it then selling it on for a profit is how they make their money. It’s a technique known in the industry as ‘flipping.’ And it can prove very successful (as you’ll know with the proliferation of such TV shows years ago – remember Sarah Beany – the Queen of Flipping?).
No having to deal with estate agents
It’s not that we have anything against estate agents – quite the opposite. It’s just that viewings take time and house purchases can regularly fall through (particularly if you end up getting caught up in a property chain). In the case of a chain it only takes one person’s buyer to pull out and the rest of the chain collapses, meaning your house sale falls through. At an auction it’s just you and the buyer – there’s no chain to have to worry about.
