There are many misconceptions vendors often have about selling at auction.
This guide will answer some of the most frequently asked questions.
What type of property is suitable for auction?
Many types of property will sell well at a traditional auction, often achieving higher sale prices than through estate agents. If your property matches any of the following descriptions, then auction will likely be right for you if it doesn’t or is of better quality, it could well be suitable for online auction.
- Does it need refurbishment? Can it be redeveloped or extended? Is there space for another home to be built? For such properties, there is a multitude of conversion specialists, small builders and clever developers who will compete to buy it.
Are there difficulties or issues with the property? Is it unmortgageable? Is there a short lease? Any neighbourhood difficulties? Does it have an adverse history? Japanese Knotweed? Any legal issues? Have sales kept failing? Such stock is most regularly sold by auction and often it is better to make auction your first-choice route rather than have it exposed and fail through an estate agent.
Is your property tenanted or has it been rented out? If so and this is its likely future use, you will want investors fighting for it.
Is it land or mixed-use such as retail with flats above? If so, then the proven route to market is by auction.
Is it a vacant or an occupied commercial lot? Is it a property being sold as an investment? If so, auction becomes the normal choice.
Are you in a hurry? Do you need a certain sale? Do you want to ensure a level playing field and full transparency? Many people do, and they choose auction for one or more of these reasons.
Can I set the price I’m willing to sell at?
Yes, this is called the reserve price. Your property will be offered subject to this reserve price, and it is kept confidential between the seller and auctions team. It is usually set just prior to the auction and is a figure below which the auctioneer cannot sell the property during the auction. If the property fails to reach its reserve, offers will then be invited from all interested bidders to try and agree a sale after auction at or above your reserve.
Why should I choose to sell by auction?
Reasons to choose auction include the speed and certainty that it offers; there is no faster way to sell and success rates through to completion are far higher than through estate agents. Other attractions are that it delivers a legally binding sale with contracts exchanged on the fall of the hammer, so neither party can pull out of the sale or try to renegotiate the price. The competitive bidding process aims to drive the price up so the property achieves its best possible price on the day too.
What are the costs?
An entry fee is a charge paid by the seller to the auctions team. This cost is to cover the cost of entering the property into the catalogue, the extensive marketing and promotion during the run up to the auction, right through to the auction day itself. It is usually paid when you instruct the team to sell your property, but on occasions and with prior agreement it may be settled from deposit monies on exchange of contracts
Sales commission is the fee charged by the auctions team for successfully selling the property. It is invoiced after exchange of contracts and usually settled by deduction from the deposit paid by the purchaser. The rate of commission is agreed between the seller and auctions team and shown in the Agency Agreement which sets out the fees and terms of business that apply.
Commission is usually 2.5% to a minimum of £3,600 +VAT. This does not include the Legal pack, which the seller can commission a Solicitor, or we can get a quote for NSNF Legal pack at Circa £600 - £725 depending on the property.