What Happens If A Property Doesn’t Sell At Auction UK?
Property auctions provide an increasingly popular route to market enabling both buyers and sellers to transact deals rapidly compared to conventional private sales. With bidding open to all attendees on auction day, a fair market price gets established for homes achieving their reserve. However, if top bids fail to reach the vendor’s expectation, sales do not proceed. When auctions prove unsuccessful in marketing a property, various options exist around the next steps.
For sellers, not attaining a successful sale on the fall of auctioneer’s gavel initially brings obvious disappointment having undergone preparations but left empty-handed. Before placing too much hope in subsequent sales cycles, understanding why reserves went unmet helps make informed decisions on the best path forward.
Why Reserves Stay Unsold
Assuming auction marketing exposure was satisfactory, a few common scenarios see reserved prices go unreached causing sales to collapse:
Properties generally sell at public auction below full market rates achievable via traditional estate agencies. This differential represents the auction fees plus incentive inducing quick sales. By setting reserves far beyond such tolerance thresholds below full value, sales become unlikely bidders reject unrealistically high owner expectations.
Insufficient Marketing Timescale
Specialist property auction advertising requires fulfilling key lead times ahead of catalogue publication to generate optimal buyer awareness. Late vendor commitments missing important cataloguing deadlines reduce promotions leaving too little visibility. Without enough viewing time beforehand, bidders cannot evaluate lots fully.
Niche Properties Lacking Core Appeal
While auctions suit typical suburban homes attracting good interest, unusual assets like equestrian farms, golf courses or graveyard plots prove extremely niche. By definition, only a fraction of buyers seek such outliers. So misaligned niche assets often struggle to find buyers willing to bid unless reserves are set very conservatively.
Unrealistic Improvements Assumptions
Vendors believing assumed planning consents or idealised improvement budgets will uplift end values extravagantly after-sales often overestimate actual worth. By fixating on ‘potential worth’ rather than ‘as is’ reality, they overprice reserves counterproductively.
Exchange Delays Deflating Momentum
Sale confirmations require exchanging legally binding contracts immediately after bidding. But attorneys for unprepared bidders delaying beyond usual 28-day limits may prompt impatient vendors to halt sales losing faith, especially if post-auction property prices drop.
Next Steps After Auctions Finish Unsold
Unlike some international property auctions, UK models rarely actually finalise or convey transaction ownership rights during the auction itself. Binding deals only occur post-auction when contract exchanges proceed. This grants unsold lots further chances to still attain sales.
After the final lot concludes auction day formalities unsuccessfully, five main options exist for vendors regrouping:
- Request Post-Auction Negotiations
- Relist in the Next Auction Catalogue Cycle
- Switch to Fixed Price Agency Sale
- Rethink Reserve Levels More Pragmatically
- Market Privately via Informal Channels
Exploring these possible next actions further assists in determining optimal ways forward.
Negotiations Inviting the highest auction bidder to discuss potentially agreeing on a deal later via post-auction negotiations represents a common first step. If the bidding stops near the reserve level, a seller may request fresh talks with the top bidder to agree on a final selling figure acceptable to both parties. Auctioneers often facilitate such negotiations through shuttle diplomacy.
Rather than undergo full reappraisals around value, relisting in the next available auction catalogue gives a quick opportunity to rerun the sale process immediately. This allows tweaking marketing messages and possibly attracting differently composed buyer audiences. However, paying repeat entry fees makes this costlier. Two campaigns also risk signalling the property as potentially problematic.
Switch to Fixed Price
Sale Reviewing auction outcomes helps set realistic pricing expectations. Switching to traditional fixed pricing agency sales via high street estate agents allows exploiting slower sales timeframes to achieve fair value. Avoiding auction fees offers some cost offset too. Though sales duration stretches less predictably. If auctions highlighted issues deterring buyers, addressing concerns also proves easier via this channel allowing property enhancements.
Grasping the highest bidding levels reached helps inform pricing sweet spots that buyers find acceptable. Vendors originally fixating on higher premiums often need to recalibrate seller reservations nearer actual market realities. Resetting reserves demands pragmatism recognising the greatest level bidders will currently exchange at. Once expectations align closer to bids, successful sales grow achievable.
Listing After public auction exposure fails, reverting to informal sales avenues might suit some properties. This may include offline channels like small ad lists, social networks or tapping into personal contacts. Lower formality around paperwork and fees makes this route potentially appealing, though offers even less certainty or regulation. Suitable mainly for unique properties in locations with niche appeal.
Can Auction Guide Prices Limit Bids Reach Reserves?
Increasingly UK auction houses publish guide price ranges in pre-auction brochures to indicate approximate expectations around value. But these only represent auctioneer estimates rather than seller-mandated caps. Reserves frequently remain confidential between the auctioneer and vendor.
Thereby possible situations do occur where bidding reaches the published guide price upper limit yet falls short of higher undisclosed vendor reserves preventing sales progression.
This phenomenon mainly impacts auction entrants with limited experience misinterpreting guide ranges as definite ceiling levels sellers will transact at, rather than underbidding in response. Veteran bidders familiar with reserve mechanics may speculate on stretching beyond printed guide spans on properties they judge as carrying further value upside.
In practice, guide prices act purely as loose value markers from the auctioneer, not decisive cut-offs controlling final bids. Keeping strategy flexible around ceilings allows experienced bidders greater chances of securing properties they desire if reserved merits stretch higher.
Special Case of Online Property Auctions
With COVID conditions accelerating online property auction models allowing remote digital bidding, similar principles govern unsold lots where top screens bids undershoot reserves. However extra factors feature around longer sale durations.
Unlike frantic real-time public auctions finishing a fixed date, online property auctions remain open accepting bids across extended 10-28-day cycles. This expands bidding windows significantly allowing potential revisiting of unsold properties. Some online portals automatically relist unsold properties into new bidding cycles periodically giving repeat chances to meet reserves without needing vendor requests.
Equally, on some online portals, bids toggling around but not quite reaching reserves prompts ‘soft closing’ where bidding stays temporarily extended further allowing bidders extra opportunity to get over the line.
These inbuilt relisting and soft closing mechanisms within certain online property auction environments ease some frustration around near-miss scenarios for both sellers and motivated buyers alike. Though ultimately vendor reserves still dictate final sales positions for online property lots also.
Questions Around Auction Outcomes
Auctions throwing up surprises around bidding levels or reserves naturally spur many questions among participants. Frequent issues arising include:
Why didn’t bidding reach the reserve despite positive interest?
If confident premium expectations deterred bidders initially, releasing reserves openly could prompt higher jump-off bidding next time around. However, an equal danger of under-selling exists when going too low. Treading a judicious line demands experience.
What sale fees apply for post-auction negotiations?
Beyond forgone buyer premiums, post-auction sales still accrue the same seller commission rates as conventional auction deals depending on agreed terms. Some avoidable marketing costs may be discounted if acting faster the second time around.
Can reserve levels get renegotiated downwards?
Post-auction, vendors do retain ultimate power to reassess scenarios and reduce reserves pragmatically to stimulate deals if previous levels overloaded buyer budgets excessively. This equates to resetting expectations closer to bidding ceilings.
When do unsold properties get relisted next?
Auction houses slot unsold properties into the next available cataloguing cycles Normally the immediate next auction. However, key marketing deadlines associated with producing brochures and managing buyer viewings require factoring.
Essentially, auctions dumping properties back into the hands of frustrated sellers do not represent terminal failure scenarios necessarily if reasonable minds subsequently prevail. While post-auction periods inevitably carry some awkwardness in navigating the next steps, certain options lending themselves better to specific property situations give possible pathways towards resurrecting deals.
In summary, property auctions instituting reasonable reserve pricing aligned with general buyer fund access stand the strongest chance of affecting successful sales on the fall of the hammer. Yet where over-optimism creeps into vendor expectations, stalled sales become inevitable. Crestfallen sellers then weighing up alternatives should reflect carefully on auction bidding dynamics to identify viable second chances still rescuing deals.
With auctions never guaranteeing transactions even providing useful value guidance proves important for owners should top bids stall. Reviewing multiple factors around unsold outcomes gives pointers on redeeming positions. And post-auction mechanisms do facilitate reviving certain property deals by bringing parties back to negotiation tables when common ground exists. Ultimately patience coupled with pragmatic ongoing communication offers the strongest hope placing awkward unsold situations back on track.