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Selling Property at Auction

Published on August 28, 2014 by John Sykes in News, Selling

I have spent over 18 years of my life working overseas. On the first occasion, I had a reasonable amount of notice to move overseas, which meant that I could take my time selling my home. On the second occasion, circumstances were completely different as I was given a very short period of notice. This meant that I also had a very short period of notice in wish to sell my property.

You might well ask “why did you not rent out your property rather than sell it?” In both instances the answer to this was quite simple – I had no real intentions of returning to the UK in the foreseeable future.

As you will already be aware, there are quite a few ways that you are able to sell your property, each of which has both advantages and disadvantages. So let us look at the criteria involved in selling property at auction.

Advantages

The main advantage is the speed with which you can complete the sale. Depending upon the time of the next auction within your area, this can be completed within a matter of weeks as opposed to many months if you decide to sell in the normally accepted method via an estate agent.

The most essential factor of course is selecting the right auction house. The auctioneer must have extensive knowledge of the value of properties within the area of your property. This will enable the auctioneer to give you a guideline as to the possible purchase price that you could expect to achieve, in relation to a similar property in your area.

The auction house must also have a good record in selling properties and must not just be a local auctioneer who only sells properties as an add-on item within another main auction. The reason for this is quite simple. If you were to buy furniture, you would hardly go to a retailer selling kitchen installations and maybe have one or two general furniture items as an add-on on the premises; you would instead go to a main, reputable furniture dealer with a wide range of products to offer. Similarly, you should go to an auction house with the reputation of selling domestic properties. Always remember that an auctioneer dealing in commercial properties will not necessarily have the required knowledge and experience in dealing with private homes.

In this day and age, the normal sale of a home involves a complete chain of connected sales before it reaches yours. By this I mean that having accepted an initial offer from a potential buyer, you will often find that buyer only becomes “real” when they have sold their own home. Similarly, they can only sell their home when their potential purchaser has sold his home and so the chain goes on.

By selling your property at auction, there is no chain. Once the hammer falls, your property is sold. It is not subject to any chain; providing there are no deliberately withheld defects in your property which could tantamount to fraud, it is not subject to any conditional survey. Of course, should the purchaser discover a similar yet cheaper property elsewhere after the auction, they cannot withdraw. It is a legally binding contract and you have achieved that which you set out to do i.e. sell your property.

Disadvantages

Your main disadvantage is the final price for which you sell the property. Without being totally pessimistic, you could pick a day on which the only potential buyers are in fact investors, property developers and even property dealers who are attending the auction. This means that they would not be prepared to purchase a house at the same price as that of a person buying for their own personal use. Investors and developers, by definition, seek to make a profit when they eventually decide to sell the property they have just purchased from you in the future.

I mentioned earlier that it is essential that you seek to appoint the most appropriate and knowledgeable auctioneer. You may come across an auctioneer who gives you a higher valuation on your property than others. Ultimately, not only does this result in potential higher auctioneer fees since these are normally based on the final sale price of the home, but it could result in your property not being sold due to this inflated valuation.

Similarly, an auctioneer offering low fees has no real incentive to market your property effectively and once more, could result in it not being sold.

Always remember that once your property has been placed in auction, you are liable for both auctioneer and legal fees, whether the property is sold or not. Granted, if the property is not sold, then the fees will not be so high!

A good auctioneer will suggest a fair and reasonable potential selling price and the fees will be in accordance with the normal range accepted within the profession.

It is always recommended that you place a reserve price on the property you hope to sell. This can produce its own problems. If the reserve is too low, this could well result in your not receiving a fair price. Similarly, if it is too high, then it could mean that the property will not be sold at all. The reserve price is not known to any potential bidder and is usually reached following discussions with the auctioneer. Hence it is essential that your choice of the auction house is correct.

Conclusions

There is no question that in the end, no matter which way you decide to sell your property, they both have advantages and disadvantages. However, from my personal knowledge of auctions, which I have to admit is somewhat limited, but coupled with my research into the effectiveness of auctions, I have come to the conclusion that this particular method when you sell your home can be fraught with problems.

Yes, the property can be sold quickly, particularly if your circumstances demand it to be so. However you will always have the continual worry “did I actually get the best price that I could by going to auction?”

There is another way which can fit all three criteria that you are looking for. This is by making a quick, effective and realistic sale for cash and we would be more than happy to give you some advice in this area.

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