How to sell your house at auction
As fans of the TV series Homes Under the Hammer will know, using the services of an estate agent isn’t the only option when it comes to selling a property.
An alternative is to sell your home at auction. This can be particularly appealing if you want to sell up quickly, or your property is in need of modernisation and improvement. That being said, auctions are also open to any home seller.
The prospect of selling at auction can, however, seem a bit daunting. So it’s important you know exactly what you’re getting into.
At an auction, potential buyers will bid for your property. The highest bid wins and usually has to pay a 10% deposit as soon as the gavel goes down in order to secure the purchase. The sale will then usually be completed within a month, when the remaining 90% of the funds are transferred. So, it all happens very quickly.
The auction typically takes place in an auction room, although online auctions are becoming more popular, particularly in light of the pandemic.
One of the biggest differences with selling via a traditional high street estate agent is that things are done in reverse order when selling at auction: whereas a typical house buyer will do surveys and legal checks after agreeing to buy a property, for an auction, the buyer does all of the due diligence first, from surveys to legal checks.
One other key difference is the pricing. Whereas estate agents generally quote an asking price, for an auction you’ll need to set a reserve price, which is the lowest price you will accept and is kept private between you and the auctioneer, and a guide price, which is the price the public is allowed to know and can be used to attract buyers. Your auctioneer can help you decide on how much each of these prices should be.
If you’re considering selling at auction, the first thing you’ll need to do is find an auction house.
Just as you would when choosing an estate agent, shop around for the best auction house for you. Make sure you compare fees: you can expect to pay between 1% and 3% of the purchase price, but this varies considerably.
Sally Smith, director and auctioneer at Loveitts, advises: “Choose an auctioneer that you like and trust. But local knowledge is key. Local auctioneers tend to get better prices, because they know the market, and have a bigger database of potential buyers.”
On the flipside, some sellers choose to work with a national firm, particularly if they expect their property to appeal to buy-to-let investors and want a wider audience.
An auctioneer will visit the property and run through the auction process with you. They’ll also advise on its potential sale price and guide price.
The auction house will market the property, usually advertising it on the same property portals as an estate agent would, such as Rightmove, Zoopla and OnTheMarket. They’ll also include it in their auction catalogue which is sent to potential buyers.
Interested parties can then come and view your property, much like they would through a high street estate agent. So as with selling your home through a standard high street estate agent, you’ll need to ensure you get it looking as appealing as possible.
Sally argues that auctioneers are more proactive than estate agents, which is essential to getting the best price possible. She says: “The basic principle is about generating interest; the more interest you generate, the more competing bidders; the more competing bidders you have, the more the price will rise”.
You will need to choose a conveyancer or solicitor to help with the legal side prior to the auction and on the day. Before the auction, they’ll prepare a legal pack for would-be buyers to review. This includes documents such as the conditions of the sale and the results of a local authority search of the property.
As with estate agents or auctioneers, it’s important you shop around for the best solicitor.
It’s the big day! Auctions can be very exciting. If you’re selling a house, you don’t necessarily need to be there in person, so it’s up to you whether you go along. If you’d rather not, the auctioneer will call you to tell you the result afterwards.
The fall of the hammer represents an exchange of contracts and the successful bidder is legally obliged to pay a 10% deposit and sign the contract before leaving the room.
It all happens very quickly after that. Completion usually takes place 28 days after the auction, so you'll be paid your money, minus fees.
So if you want to sell your home quickly, an auction could be worth considering.