Auction houses provide a unique way to sell a house.
They bring distinct advantages and disadvantages, depending on the situation.
But can anyone attend an auction house? Are all of them reliable? And how much do they charge for their services?
Let’s explore all of these questions and more.
What is an auction house?
An auction house is an organisation that sells assets (such as artwork, memorabilia, and properties) using an ‘open bidding’ approach.
It enables bidders to place an offer on the item being sold. The person with the highest bid at the end of the session wins.
According to online data, there are well over 1,000 auction houses around the UK today.
Only a few hundred of these are specifically dedicated to property sales.
How property auction houses work
In most cases, an auction house that sells property will arrange open viewings of any house being sold in advance.
(Some estate agents, such as Savills, have auction houses offering, too.)
This system enables potential bidders to walk around the property and decide whether to bid for it.
Then, whoever makes the highest bid on the actual day will usually be expected to make a 10% deposit before making a final payment.
With some auction houses, it is possible to bid without being physically present on the auction day.
You must contact the auction house in advance. They may offer ‘telephone bidding’ or ‘proxy bidding’.
Once a bid is accepted, that individual is legally required to purchase the property. This helps make auction houses a popular option for selling a house fast.
How long does the auction take?
The typical auction process usually takes 8-12 weeks.
There’s an initial (approximately) 2-week preparation period to register, receive legal documents, and list your property.
The property is then marketed for 6 weeks, allowing potential buyers to view the property and arrange surveys.
The auction day itself takes about 6 hours. After contracts are exchanged and a deposit is made, the full funds are transferred within 4 weeks.
Can anyone attend an auction house?
Anyone can attend an auction house without needing to register. However, this does not guarantee that they can participate in it…
Participation (i.e., being able to make a bid) will depend on the specific auction house.
Some organisations accept bids from anyone. Others require a sign-up and proof of funds in advance.
How much does an auction house charge?
Most auction houses charge a flat entry fee to list your property. They then then take a commission on the final sale price.
Several online sources indicate that the typical auction house commission rate for property is 2%. Value-added tax (VAT) is often charged on top of this.
The flat rate will vary depending on the organisation you use – it can be anywhere from £150 to over £1,150.
If you have any questions, contact a specific Auction House and ask them for a clear overview of their rates.
Why do people choose to sell a house at auction?
1. For speed
Many people sell their houses fast at auction because it is almost always a much faster way to sell a home than through a traditional estate agent.
After all, if the property is priced fairly and marketed well, offers can come on the same day it goes ‘live’ at the auction house.
2. For a high degree of certainty
Selling a house at an auction also provides a relatively high level of certainty for a sale.
It primarily does this by enabling you to sell outside a property chain.
Since chains cause much of the stress and delays in a house sale, some people will do whatever it takes to avoid these!
3. For making difficult sales
Auction houses help sell properties that would require more work to find a buyer on the open market.
You can still complete a sale at auction if there are issues such as:
- Property in a bad condition (including issues with its structure)
- Disputes with neighbours (including over land issues)
- Sitting tenants.
However, it will likely be at a significantly reduced price.
What sort of people go to an auction house?
Many property investors and developers are attracted to buying a house at auction.
These people are aiming to spot a property with huge renovation potential.
In other words, it can sell for a substantial profit once some updates are done to it.
Do auction houses only sell derelict properties?
No, auction houses usually sell a range of properties.
Of course, some people like to buy or sell derelict properties, deemed ‘unacceptable’ on the open market, at auction.
However, most properties at auction are regular residential properties requiring some renovation.
Will the auction house complete a property survey for me?
Not usually. In most instances, a buyer must pay for a survey for a property they want to bid on.
How do I prepare for an auction?
If you’re a seller at auction
If you sell your property at auction, an in-person staff member should guide you.
In an ideal world, you will choose a company without penalty for sellers who drop out.
If any part of the auction process (up until bidding day) makes you uncomfortable, you can walk away without being penalised.
If you’re a buyer at auction
On the other hand, if you are attending an auction house as a potential buyer, follow a few key steps. These include:
- Get hold of the viewing catalogue
- Register with the auction house (if necessary)
- Arrange to view the properties
- Check the legal pack
- Get a property survey done
- Seek an independent valuation
- Decide on your price limit
Some people even choose to arrange building insurance. This for timing it to come into effect on the day a bid is accepted and the contracts are exchanged.
If you have never been, attending other auction house days may be worthwhile for observing events. This can build up your experience and knowledge of the process.
Smaller details can also affect your success on the day. These include preparing all the required paperwork for completing a sale, getting a good front seat, and ensuring your bids are clear.
While it’s common to be a cash buyer to participate in property auctions, it isn’t always the case. Other financing options available:
- Mortgages
- Loans
- Equity release
- Peer-to-peer lending and crowdfunding
How cash buyers like We Buy Any Home can sell your house fast
An alternative to selling your house at auction is selling your property to a cash buyer like We Buy Any Home.
This results in significantly fewer expenses than selling on the market with an estate agency.
We will sell your house fast while helping you save on legal fees, estate agency commissions, and other costs of selling a house.
