Deciding to Sell at Auction
Deciding whether to sell by public auction or private treaty is ultimately about what is right for the seller. Auction, however, does provide a higher degree of certainty which can be very appealing, especially if time is a factor in the sale as once the gavel falls a legal and binding contract is made with completion usually within 4-6 weeks.
Decided to sell at auction?
If the benefits of selling at auction appeal, then you firstly need to decide on an auctioneer based on such factors as the auctioneer’s expertise and location, the costs and how the property will be marketed in the run up to auction.
Sale costs usually depend on lot size and location and are normally split between a catalogue entry fee and a sale commission based on a percentage of the sale price.
In terms of marketing the property and the auction most auctioneers still produce a printed catalogue which is widely distributed and advertised in the press. In addition email, online advertising and social media are widely used and, as with a private treaty, sale viewings will also be arranged in the run up to the auction.
How do we decide on the guide and reserve price?
The reserve is the agreed minimum price a seller will accept for the property - it is kept confidential between seller and auctioneer.
Although definitions may vary between auctioneers, generally the guide price should reflect the reserve and thus what the property might be sold for. It is important to keep an eye on the auctioneer’s web site for any updates as new information comes in and sometimes the reserve and guide can change before the sale.
Whose responsibility is the survey?
The adage “buyer beware” is slowly being whittled away by consumer protection legislation meaning that sellers should now disclose details they are aware of that may materially affect the value of a property. However, it is still important that buyers undertake their own due diligence in terms of reading all available documentation and satisfying themselves as to the condition of the property. The obvious way to find out about the condition of a property is to inspect it, if needs be accompanied by a surveyor or a builder and always allow a contingency for unforeseen costs.
At what point is the property sold?
Although a property may be put up for auction it is possible that some sellers may be tempted to sell prior to a sale. Equally, if a property fails to sell on the day of the auction there is every chance it can be sold post auction at which stage the auctioneer is at liberty to disclose the reserve.
Assuming that the property goes to the room, however, all someone has to do to buy your property is keep bidding! If all goes well, bidding reaches or hopefully exceeds the reserve, and the bang of the gavel will be the signal that you have sold your property!
So, what next?
The successful buyer will be asked by the auctioneer to produce ID, sign a memorandum of sale and pay a deposit, usually 10% of the hammer price.
It is also usually a requirement for the buyer to insure the property. This needs to be done straight away. Then, all that remains is for the buyer to find the balance of the purchase price ready for completion!
Selling at auction can be simple for both the seller and buyer but doing the groundwork beforehand will ensure that both parties are happy with the sale.