If you are considering selling your home, or having trouble with finding the right buyer, it may be worth thinking about alternative routes to the conventional high street estate agent. Selling a house at auction is becoming an increasingly popular option for buyers and sellers around the UK, and is particularly favourable for those who wish to achieve a fairly quick house sale. If you are interested in auctioning your house, you may be wondering “how do house auctions work?” and “how much does it cost to sell a house at auction?”.
Read on to find out more about the auction process and whether it’s the right option for you. If you still need some advice about the alternative methods of selling your home, such as selling property at auction or via online estate agents such as ours, don’t hesitate to contact us.
Although there are no hidden auction fees, the cost of selling via auction can really mount up; before long you could be financially unable to go on with the process. Therefore, it is important that you do your research properly before you begin selling property at auction, by shopping around for the best deals. The cost of putting your house up for auction is considered to be expensive, so it is definitely worth the search.
However, despite this, it is still fast becoming a popular route to buy and sell. According to a recent Twitter poll carried out by Zoopla, 70% of respondents said they would be happy to consider purchasing a property at auction, so even more of a reason to consider it when selling your home.
Would you consider buying a property at auction?
— Zoopla (@Zoopla) October 27, 2016
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By selling property through auction, homeowners should expect to pay auction house fees of around 2.5% of the sale price. For example, if you decide to sell your home for the value of £250,000, you should expect to pay the auctioneer £6,250.
Due to the high cost, it is vital that your home has enough interest to reach your reserve price – the minimum amount that you will accept for your home. If your property doesn’t sell – which often happens – you are still liable for the auctioneer fees. It is also advised to check whether there are any advertising auction costs when selling, as this may be an additional expense to consider as well.
Another cost to bear in mind is the legal fees, as you have to hire a solicitor, so this should be factored into the costs of selling your home at auction. They produce a legal pack, which includes the title plan, lease details and any other important information needed and is read by potential buyers prior to making an offer on your property. The fees for this depend entirely on the solicitor, but they tend to cost you around £350 to £500, so be sure to search around for the best deals and service.
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On the day of the auction, once the auctioneer has hit their hammer and the offer is accepted by you, it is time for the ball to start rolling. You have now come to an agreement which is legally binding. You, the person selling the home, are required to pay an additional fee to your solicitor for the conveyancing, in order to get your property sale completed. These fees can differ significantly throughout the country, however they tend to range between £450 and £750 (plus VAT), depending on the price your property is purchased for.
Altogether, this means selling via auction can cost up to £1,200 (plus VAT) for solicitor fees, as well as 2.5% of the house value to the auctioneer. For example, for a £250,000 house, you must pay the auctioneer £6,250 on top of a maximum price of around £1,250 for the solicitor, totalling £7,500.
Do not forget about these expenses when asking yourself how much it costs to sell a house at auction.
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There are a number of pros and cons of selling a house at auction. Not only is selling your house via auction growing in popularity, the completion time is often quicker than using a typical estate agent and there is less worry that the buyer might withdraw their offer. Once the hammer falls, an agreement is made, and the buyer must pay a 10% deposit – ideal if you want money in your account promptly. However, it’s not the quickest or cheapest route to selling fast.
In addition, selling a house at auction tends to attract individuals who are looking for a project, or expert buyers such as developers or landlords who are on the look-out for a certain type of property – take ‘Homes Under the Hammer’ as an example. These potential buyers know enough about the market to understand the true value of your property and aren’t put off by any problems or the need for a renovation. The perfect scenario if you are in a position where you need to sell your home quickly and for a reasonable price.
Specifically, if you have a unique or particularly run-down home you may find it difficult to find a buyer through the conventional estate agent route. Therefore, in this case, selling your home at auction, even with auction fees, could be the answer for you. This is because buyers will happily compete against each other for the chance to snap up a one-off property below market value. As a result, your property should be sold at the end of the auction, providing there is enough interest in the auction room and you’ve set a realistic reserve price – this is usually around 75% to 80% of the market value.
Have you ever wondered what exactly the auction process entails? If you decide that the costs of selling a house at auction are worth it, the process will encompass the following seven steps:
- Auction appraisal
- Legal pack
- Reserve price
- Auction day