Auctions can be a great way to sell your house – but there are a lot of differences compared with selling on the open market.
Understanding the process of auctioning houses, as well as the costs involved, is key and this guide explains everything you need to know.
How do auctions work?
At an auction, your property will be put up for sale as a ‘lot’, with buyers able to make bids based on what they’re prepared to pay for it.
Bidding continues until no further bids are made at which time the property is sold to the highest bidder if its reserve price is met.
The reserve price is the lowest price you’re prepared to sell for.
The different types of auctions
There are two ways you can auction your property, and both come with slightly different processes you’ll need to understand before you commit.
The Traditional Method of Auction
The Traditional Method of Auction is most commonly used by auctioneers conducting a live, in-person auction at an auction house.
Under the traditional method, the successful bidder exchanges contracts with the seller as soon as the auction finishes and must also pay their deposit on the same day.
They then have a further 28 days to complete the purchase.
The Modern Method of Auction
Under the Modern Method of Auction, which is used by online auctioneers, the successful bidder pays a non-refundable reservation fee at the end of the auction – but contracts aren’t exchanged right away.
Instead, the buyer has 28 days to exchange contracts, followed by a further 28 days to complete the purchase.
Because of the gap between the auction and exchange of contracts, modern or ‘conditional’ auctions give buyers time to arrange finance.
What happens if your property doesn’t sell at the auction?
If your property fails to sell at auction, or doesn’t meet its reserve price, it will be listed as ‘unsold’ by the auctioneer.
You then have the option to list the property again at a future auction or consider offers from bidders after the auction.
If you do decide to negotiate with bidders after the auction, it’s likely you’ll have to sell for below your reserve price.
How much does it cost to sell at auction?
Your auctioneer will charge several fees to sell your property, including:
Sale commission
Your auctioneer will charge you a percentage commission based on your property’s sale price, but on a no-sale, no-fee basis.
This is usually between 1% and 3%, meaning if your property sells for £120,000, you’ll pay between £1,200 and £3,600.
However, if your property doesn’t sell if fails to meet its reserve price, you won’t have to pay this fee.
Listing and marketing fees
To cover their costs of hosting the auction and marketing your property, your auctioneer will charge you a fixed fee which is payable up front.
This is often between £200 and £300 plus VAT but can vary.
Selling at a ‘modern’ online auction
Some online auctions may charge the buyer a fee, known as a ‘buyer’s premium’, meaning no charges would apply to sell your property.
However, buyers often factor this fee into their bidding, meaning you may have to accept a lower price for your property to avoid paying auction fees.
Other costs you’ll need to consider
On top of any auctioneer’s fees, you’ll also need to pay a solicitor to complete various legal work when you sell at auction.
Up front, you’ll need to pay a solicitor to compile a legal pack, which buyers can read before they attend the auction.
Then, if your property sells, your solicitor will add on any additional charges for further work.
How to sell at auction
Selling at auction can seem like a daunting process but understanding what to expect before you commit can help.
1. Find an auctioneer to sell your home
The first step towards selling at auction is to find an auction house.
Just as you would when looking for an estate agent to sell your home, it pays to do your research.
Look online for auctioneers near you and read their reviews, as well as speaking to friends and family if they have experience of selling at auction.
Questions you should ask an auctioneer before committing to selling your home include:
- What they’ll charge to sell your property
- How much they’ll charge you up front
- How they’ll market your property, including whether they’ll advertise it online
- How many bidders they usually attract to their auctions
- How popular properties like yours are with bidders
Once you’ve found an auctioneer, they’ll visit your property to value it and assess how suitable it is for auction.
2. Register your property early
When you’ve found an auctioneer you’re happy with, you’ll need to register your property with them and agree to their terms of sale.
These terms will include:
- Details of all fees and charges and when they’re payable
- Details of your property
- How your property will be marketed
You should always register your property as early as possible ahead of your chosen auction date, as this will give the auctioneer time to include your home in their marketing materials.
3. Set a guide price for your property
When agreeing to your auctioneer’s terms, you’ll set a guide price for your property.
Your property’s guide price will be listed alongside its details and is in place to give bidders an idea what they may have to pay to secure it.
Your guide price will often be lower than what you hope to sell for, simply to tempt buyers into bidding.
4. Agree a reserve price with the auctioneer
Your property’s reserve price is the lowest amount you’re prepared to sell it for at the auction.
The reserve price isn’t made public to bidders, but if the auctioneer fails to secure a sale that meets it, your property will go unsold.
5. Appoint your solicitor
When selling at auction, potential bidders will be given a legal pack prior to the auction date, which will outline everything they need to know about your home.
You’ll need to appoint a solicitor as early as possible before the date of the auction, to give them time to complete searches and put together the pack for your property.
6. Prepare your home for marketing and viewings
How effectively your auctioneer markets your home before the date of the auction will be key to how popular it is with bidders.
You should prepare your home and ensure it’s looking its best for:
- Marketing photographs, which should be included in the auction brochure and with listings online
- Potential viewings from bidders before the auction
7. Check the listing is correct
Before your auctioneer starts marketing your property, make sure all its details are correct and that you’re happy with the auction house’s description.
8. Attend the auction or wait for a call
While it’s not necessary for you to attend the auction, you can do so if you wish, or in many cases, watch the action live online.
If you decide not to attend, your auctioneer will contact you after the auction to let you know if your property sold and, if it did, what it sold for.
The advantages of selling your home at auction
Selling your home at an auction comes with some advantages, including:
- Committed buyers – the successful bidder will exchange contracts with you on the day of the auction, giving your certainty
- Competition – if lots of bidders are interested in your property, they’ll compete against each other, potentially pushing up your sale price
- More diverse market – auctions usually attract developers and investors, so your property will reach a more diverse set of potential buyers
The disadvantages of selling at auction
Although there are advantages to selling at auction, there are also some disadvantages you’ll need to consider, including:
- No guarantee on price – you’ll set a minimum reserve price for your property, but there are no guarantees on what it will sell for above that figure
- You’ll need to move quickly – although the fast turnaround of auction sales can be a positive, it does put pressure on you to move quickly if you’re living in the property you’re selling
- Up-front fees – although your auctioneer’s commission is likely to be no-sale, no-fee, it’s likely to be more expensive than a traditional estate agent, and there are up-front charges you’ll need to pay, too
