Property News

Selling residential property at auction

Do you need to sell a property quickly and easily? Are you worried that the property you want to sell is so unique for the area that it is impossible to price accurately? Is your home in need of refurbishment and does this make you worry that it will not match up to local sold property prices? Does your home have particular legal entanglements, such as tricky easements that have obstructed previous attempts to sell?

If your answer to any of the above questions is "yes", you might want to consider selling your property at auction. However, it is essential to remember that you have a legal obligation to be honest about any problems affecting the property, for example neighbour disputes or Japanese knotweed.

Auctions: not just for property professionals and investors
Contrary to expectations you may have garnered from "Homes Under the Hammer" and the like, property auctions are not the unique stamping ground of the property professional. Plenty of residential owner-occupiers and small-time investors also use them to buy and sell - and, provided they choose their auction house wisely, their decision can prove very profitable and may result in a winning bid that exceeds average sold property prices.

Finding the right auction house
Picking the right auction house for your property is not necessarily a case of phoning the nearest one. First of all, you need to consider what sort of auction house will generate the best exposure for your property. That might be a local auctioneer but, equally, it might be a national auction house. For example, if you are hoping to auction a buy-to-let property, or one that is of potential interest to a buy-to-let investor, you may wish to consider using one of the large national auction houses - and probably one that is based in London. This is because these are the auction houses that have the greatest reach and attract the largest number of potential buyers.

How much will it cost you?
Putting a property in for auction isn't free. You probably expect to have to pay a commission if your property sells - but did you also know that you must also pay a fee to put the property into the auction in the first place? Fees vary between a few hundred and a few thousand pounds. As a rule, the larger, national auction houses charge more but, in return, your property should benefit from wider exposure to a greater number of possible bidders. Commissions on successful sales usually hover around the 2.5 per cent mark (although don't forget to add on VAT). Needless to say, this is considerably more than the fees charged by most estate agents, particularly at the moment. However, you'll be paying for speed and convenience - and only you can decide if the extra cost is worth it. Occasionally, when it comes to very low value properties, auctioneers will substitute a flat fee for a commission.

Setting the price
From an auctioneer's perspective, it is important for sellers to be realistic about prices. If you decide to put your property into auction, you'll need to set a guide price. This should be calculated carefully so as to tempt as many potential buyers as possible into coming to the auction and - hopefully - putting in a bid. Unless you want to be rid of the property at all costs, you'll almost certainly also want to set a reserve price - or, in other words, the lowest selling price that you would be willing to accept. The auction house will be happy to advise you on both guide price and reserve price as soon as you have given them some general information about the property. This would normally include its address, type (flat, terraced house, semi, detached etc.), approximate size, freehold or leasehold, an indication of the condition (e.g. whether it needs renovating, and whether it has a useable kitchen and bathroom), and whether it has any subsisting tenancies.

Your property's catalogue entry
Once you've agreed a reserve price, the auction house will prepare your property's entry in its next auction catalogue. To do so, someone from the auction company will visit the property, inspect the exterior and (where possible) the interior, and take photographs, room measurements and other pertinent details. The collated information will form the basis of the property's entry in the auction catalogue. You should have the chance to verify this information before the catalogue is made public, and it's important that you do so as this is your only chance to correct any inaccuracies before the auction itself. Auction catalogues may be distributed by post (to those who have expressed an interest in receiving them) as well as being put up online. It may be important to you that your property features on online portals such as Rightmove. If so, you should check that your chosen auction house arranges for this before committing to them.

Preparing the legal pack
Before the auction, you will need to instruct a solicitor or property conveyancer to prepare the property's legal pack and draft contracts.

At the auction
It's not actually necessary for you to attend the auction, and some sellers prefer not to do so. If you're one of them, the auction house will phone you as soon as the auction is over to let you know whether your property sold and for how much. If the auction did result in a successful bidder, you can expect the auction house to have taken appropriate ID from that bidder plus their 10 per cent deposit. The auction house will also ensure the relevant documents are signed on your behalf.

Completion
Completion normally occurs a set number of days after a successful bid at auction. Most auction houses have a standard number of days within which completion must occur. Twenty days is fairly standard but it is usually possible for you, as the seller, to vary this when completing the pre-auction paperwork. Your legal advisor can help you do this.

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Source: Nethouseprices.com 25.11.19

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