Selling Your House At Auction
Selling at auction is becoming more and more popular. Not only is it a way to achieve a quick house sale but there are also many other benefits compared to selling your home the ‘traditional’ estate agent way.
The process of selling at auction can be quite complex, so we have put together a guide that will answer any questions and clear up any confusion.
Property auction key information
| Around 20,000 residential properties are sold by auction each year in the UK. | Auction sales are increasing in popularity in the UK – on average, 11% more houses are sold by auction year on year. |
| 4 – 10 weeks is the normal expected timeframe for an auction sale. | Property auctions typically achieve 75-80% of the property’s value and are subject to an additional cost known as ‘auctioneer fees’ which can be up to 2.5% of the final sale price. |
In this guide:
- What is a property auction and how does it work?
- The costs of selling a house at auction
- How do cash buyers and a traditional sale compare to auctions?
- Key advantages and disadvantages of property auctions
- The property auction process
- UK auction houses
- Other key questions answered
What is a property auction and how does it work?
In a property auction, commercial and residential properties are sold to the highest bidder; several bids are taken until the highest amount is achieved. Based on a guide price, bids for the goods ascend in price, with bidders openly bidding against each other.
Property auctions can be in-person, online or a combination of both. Online auctions operate differently than traditional in-person auctions. Bidding happens either via a live stream or people logging in to place their bid before the expiry date and time – you usually have quite a few people ‘watching’ the property online, as you would on eBay.
Auction attendees vary, and are normally a mixture of private buyers and commercial buyers, meaning your property will be presented to a wide range of people, from experienced property developers to first-time buyers.
When it comes to selling a property, to secure the sale, the bidder needs to put down a 10% deposit of their bid and will have a month to transfer the remaining 90%. Overall, timescales are generally quicker than more traditional selling methods, as contracts can be exchanged immediately once the auction is over. If the winning bidder backs out, you get to keep their 10% deposit.
The costs of selling a house by auction
Although selling your house at auction will help you achieve a fast sale, it is an expensive option. Costs can be as high as £1,200 plus VAT for solicitor fees plus 2.5% of the house sale price on top of that for what is called an ‘auctioneer fee’.
Auction sales tend to see houses selling at around 75% of the property value too, as bids typically start lower to try to encourage more potential buyers to bid on the property.
What are the auctioneer fees, you ask? This is expected to be in the region of 2.5% of the final sale price. Some auction houses charge additional fees on top of this, and you may also be liable to pay fees to the auction house even if your house doesn’t sell. This could be to cover admin and advertising costs, so always do your research and ask plenty of questions before embarking on your sale.
You’ll need the support of solicitors to put together a legal pack for your sale too, to allow potential buyers to review your property in detail. Again, the cost of this will vary depending on the solicitor and your location in the UK, but budget up to £500 for your legal pack to be produced just to be safe.
Once the highest bid has been accepted, the sale is legally binding. A final fee to be aware of is a conveyancing fee to get the property sale completed swiftly. These fees can range between £450 and £750 plus VAT, depending on the price that the property is sold for and the level of work required.
How do cash buyers and a traditional sale compare to auctions?
One guaranteed sale approach is using a cash house buyer like Good Move. We can buy your property within two weeks of your inquiry date, and we will generally pay between 80-85% of the market value, meaning you still get a great price for your home. One huge benefit is that we take care of and pay for all your legal fees, and there are no hidden estate agent fees to pay either.
As for selling your home the traditional way, with an estate agent, it can be time-consuming with large costs and potential long chains. However, it does offer a sense of security, with numerous checkpoints along the way. The costs associated with the more traditional method will include estate agent fees (on average, 1.28% of the sale price plus VAT) and solicitor/conveyancing fees (around £1,500, depending on the price) so it’s an important figure to factor into your budget.
| Sale Type | Auction | Cash buyer (Good Move) | Traditional sale method |
|---|---|---|---|
| Typical fees/costs | Solicitors fees – £1,200 (plus VAT) Auction fees – 2.5% of the house sale price Legal pack – £500 Conveyancing fees – £750 (plus VAT) Achieves 75% of value | Everything is paid for you Achieves 85% of value | Agency fees – 1.28% of sale price (plus VAT) Solicitor fees – £1,500 Achieves 95% of value |
| Timescales (average) | 56 days | 14 days | 150 days |
| Take home (£200k house) | £143,410 | £170,000 | £185,580 |
The above table does not take into consideration any additional costs e.g. mortgage payments that might be incurred during the sale time frame.
Key advantages and disadvantages of property auctions
Before you decide to sell your home at auction, it’s important to weigh up the pros and cons to ensure you’re making the best decision for you.
Three of the main advantages are:
- It’s a way to sell your home fast and can mean that the sale can be completed in just a couple of months.
- Auctions attract serious buyers, meaning your home will be marketed to people who are serious about buying property or investing in property development.
- You have more control over your sale compared to selling with an estate agent, allowing your house to sell quickly at auction.
On the other hand, the main disadvantages are:
- There’s no guarantee that your home will sell at auction, so you may have to go through the whole process again, listing your home with an estate agent or exploring other options such as cash buyers.
- You may not achieve the price you hoped for, mainly because you have a lack of control when it comes to the bidding process, and people could always offer less than the guide price.
- There are generally more risks involved with auction sales, and if you are the type of person who would prefer everything to be safer and more guaranteed, you’re better suited to other sale methods.
The property auction process
Let’s break down the different stages of the auction process to help you understand what to expect and when.
- Auction appraisal
First things first, you need to decide on which auction you will use to sell your house. Make sure you’ve done plenty of research to see if they specialise in any particular areas or how often they sell homes via auction. After that, it’s onto appraisal, where you’ll need the support of an approved auction valuer. They’ll discuss how much you can expect it to sell for and advise on a reserve price. There is no obligation at this stage, so make sure you ask plenty of questions and gain as much advice as possible.
- Instruction
Happy to go ahead? It is time to sign your terms and conditions and all the documentation required to sell at auction. After this, a draft description will be created for you to approve.
- Legal pack
It’s time to choose a solicitor! Your legal pack should include title searches, applicable searches, conditions of sale and other official guidelines to help you sell your home successfully. For more guidance on your legal pack, check out our separate detailed auction legal pack article.
- Marketing
Marketing is an important step to help generate as much interest and excitement around your house as possible, encouraging potential bidders to attend on the day (or watch online) to place a bid on your house. Social media, auction boards, websites, and newspapers/magazines will all be used to help give your house as much traction as possible.
- Reserve price
You will have been advised of this previously (step 1), but it will be more accurate and advanced now that marketing the property has begun. Take your time with this and don’t rush to reach a figure because this will be the starting bid, so it needs to be the best price to reflect the property. Too high and you may struggle to get anyone to bid. Too low and you could sell your home for a lot less than it’s worth.
- Auction day
Auction day has arrived! Potential bidders will need to register beforehand, provide copies of their ID, and undergo legal checks just to make sure everything will run smoothly and there are no signs of fraudulent activity or history.
Bids start from the reservation price and hopefully increase in alignment with that. Once the hammer hits, contracts are exchanged instantly, and the winning bidder will need to pay their deposit, giving them a month to pay the remaining amount.
- Completion
On average, it takes around a month for a house sale from auction to complete. The auction house and solicitors will speak to you to discuss and/or confirm each step of the process, including arranging viewings at the property, completion dates, handing over the keys etc.
UK auction houses
There are around 300 auction houses across the UK, so you’re guaranteed to find one near you that allows you to sell your home quickly. You will find fewer online auctions, but they are starting to increase at the rate of interest.
Some of the largest firms are listed below. Most, if not all, of the auction houses on this list have online channels available too, with plenty more that operate at a regional-only level. Fees vary with each individual auction house, so be sure to do your research to determine which is the best option for you:
Allsop – https://www.allsop.co.uk/auctions/
Clive Emson – https://www.cliveemson.co.uk/
Pugh – https://www.pugh-auctions.com/
Savills – https://auctions.savills.co.uk/
Am Sold – https://www.iamsold.co.uk/
The Alternative
One of the new approaches to get a guaranteed sale is through property buying companies such as Good Move. We are a surveying firm, which operates in the ‘We Buy Any House’ Industry, and are regulated by the RICS (Royal Institution of Chartered Surveyors) and the NAPD (National Association of Property Buyers). We purchase properties anywhere in England and Wales, regardless of its condition. We can buy your property within two weeks, and we will generally pay between 80-85% of the market value. You won’t have to worry about legal fees, as these are paid by us, and you also have no estate agency fees to pay either.
We hope we have explained the auction process well, however should you require any further information, please do not hesitate to contact us on 0800 802 1175, 0113 892 1122 or hello@goodmove.co.uk
Other key questions answered
What do I do regarding pre-auction offers?
We generally suggest letting interested parties fight it out on the day with other buyers rather than accepting offers made outside of the auction process.
Before going under the hammer, your property will be marketed to many buyers via the auction catalogue and a number of viewing days will be arranged before the auction date. It is perfectly normal for homeowners to receive offers on their property prior to the auction date. It is the homeowner’s decision as to whether they will take the offer or risk going to auction, with the uncertainty that the property may not sell.
Depending on individual circumstances, you may need the money quickly and maybe you can afford to wait for the auction date. Here at Good Move, our surveyors always recommend that if you have already gone to the expense of paying auction and solicitor fees, you may as well wait for the auction instead of accepting an offer pre-auction (if you can afford to).
The thought process behind this, is that if there is a strong interest for your property prior to the auction, then this interest usually will stay until the day of the auction. Therefore, we suggest letting interested parties fight it out on the day with other buyers. This will usually help you achieve the best price by creating competition.
Do I need to stage my house for a property auction?
Unless the right kind of buyers are in the auction room on the day, your property might not sell. We recommend that you put some time into presenting your property in the best possible light for the open days, prior to the auction. This could be done by giving your property a deep clean, buying fresh flowers, or giving your property some great kerb appeal with the likes of hanging baskets and landscaped/manicured gardens.
Do I need to market my property as part of a property auction?
While technically the chosen auction house will do a load of marketing around the particular auction, you may also want to do everything you can to draw attention to your particular property listing. Most auction houses provide a sign, similar to a traditional estate agent so your biggest bang will likely come from social media.
If you are selling your house at auction, we recommend that you share your property advert in the auction catalogue and individual URL if the auction is available online, through your social media channels. This can help generate more interest around your property.
What happens if my property doesn’t sell at the auction?
In short, a few things. Any interested parties will be asked to register their interest and see who has the highest bid. People may still be interested despite not bidding under the hammer. Most houses that go to auction do sell, but it’s worth being aware that in recent years, as many as 21% of properties that went to auction failed to sell.
What is a property’s common value?
You may have heard the term ‘common value’ associated with auctions. This refers to the value of the house being sold at auction, which is the most common among all of the bidders. Regardless of how much personal valuations vary, the ‘common value’ will remain the same.
Do you pay stamp duty on auction properties?
If the house is valued at over £250,000, then stamp duty is required to be paid, regardless of how the sale was acquired. Whether at auction or with an estate agent, stamp duty will need to be paid.
