Firstly, don’t believe the myth that properties sold at auction are usually repossessions. Some are, of course, but the majority aren’t. In fact, the reality is that for certain kinds of private sellers, the auction process offers the prospect of a quick sale, whilst avoiding the frustration, expense and risk of collapsing chains that can come when selling via traditional means.
Of course, as with anything in life, the auction process has many advantages and disadvantages to consider. If you’re based in Ipswich, Colchester or London, we advise getting in touch with our auction team before you commit yourself fully.
Advantages of selling a property at auction
- Ideal for a swift sale. From booking your property in with an auctioneer, to the day of the actual auction, typically takes around 28 days. Compared to the 3 months it takes to complete the average sale, auctions are much faster. However, Attwells local conveyancing teams only take 6-10 weeks.
- Contracts will be exchanged on the day of the auction. Assuming your property sells at auction, contracts are exchanged there and then. At this point the buyer is legally committed to completing the sale by a set date, which is generally less than 28 days later.
- A transparent process for buyers and sellers alike. When you sell a property via an estate agent, you are trusting them to market your property to the best of their ability, get the best price, and find the kind of homebuyers who will be reliable and able to commit to the offers they make. No matter how reputable the estate agent, the reality is that chains can fall through, and buyers can pull out of a sale any time before contracts are exchanged, for all sorts of reasons. An auction, on the other hand, is a chance to sell the property to the whole market, with the knowledge that once a winning bid is received, contracts are exchanged, and the process then becomes legally binding for both parties.
- Find the right buyers for an unusual or difficult to market property. Is the property you are selling unusual in some way, or in need of a bit of upkeep? Whilst estate agents primarily sell to people looking for their next home, auctions attract a varied mix of buyers. People like investors and builders regularly attend auctions, and they have an eye for unlocked potential, and have the capability to fix up issues that would deter other kinds of buyers.
- The bidding process could push the price of your property up. If your property attracts a lot of interest at auction and a number of people make a bid, you could find the sale price exceeds your expectations.
Disadvantages of selling a property at auction
- Some buyers don’t like the auction process. The competitive nature of the bidding process can put some people off. And some will simply be unsure of securing a mortgage for an auction property. After all, whilst you can use a traditional mortgage to make a purchase at auction, the seller still has to be sure their lender can act with the speed necessary, or risk breaching the rules of the legally binding contract.
- It can be a gamble. On one hand you probably have a minimum sale price you need your property to achieve at auction, but on the other hand, you might be tempted to set a lower reserve price to create a buzz and attract interest. This could work in your favour, or backfire and mean you end up legally committed to selling your property at a price you aren’t happy with. Would you be comfortable making these kinds of risk/reward decisions?
- No guarantees the property will sell. If no bids meet the reserve price on auction day, then most auctioneers will contact everyone who expressed interest and invite them to submit a highest offer. They will then inform you of what has been offered, and leave it up to you to decide whether you want to accept and exchange contracts. If you aren’t happy with any of the offers, you can still resubmit your property to auction. However repeating this process will incur further costs, at no guaranteed return, and you could ultimately end up paying more than you would have done by using an estate agent.
Meet the Attwells Auction Team
Before you commit to selling a property through an auction, you should seek expert legal advice from The Attwells Auction Team. Our expert solicitors understand the nature of auctions and will be in your corner to offer swift and informed guidance that suits your needs and schedule.
So whether you are buying or selling at auction, call us today for a quotation on either 0207 722 9898 or 01473 229200, or email Tanya Warnes.