Buying or selling a house at an auction can be both daunting and exciting. Selling your house at an auction might seem unconventional to some, but for others, it is the only way to make the sale go through. While some sellers might prefer to sell their home through the traditional method of house viewings or hire local estate agents such as estate agents in Leeds, others might prefer to let the auction house take care of the selling process. Essentially, it is for the homeowner to decide which method they choose to sell their home. However, selling your home at an auction is not as easy as it sounds. Here are 7 unknown things that homeowners and sellers need to consider before putting their property in an online auction.
1. The process moves very quickly
Selling your house at an auction means selling your house in a short time frame. Usually, if you decide to enlist your property at an auction house you can expect your house to sell within 6 to 10 weeks. So, if you are still looking for a new home to move into, you might want to get everything in order before putting your house in an online auction. When it comes to an auction, things move very quickly, so before you know it your house will be sold and the new homeowners will be ready to move in.
2. Reserve prices determine auction fees
The auction house will conduct an appraisal of your home to let you know the value of your property. This will help you set the reserve price for your home, which will essentially be used as the start bid. However, it is important to set the right reserve price for your home as most auction houses will charge a percentage of the reserve price, or the sale price, as the auction fees. In case no one bids on your home, you will still have to pay the auction fees based on the reserve price – the higher the reserve price, the higher the auction fee.
3. High associated costs
Selling your house at an auction might just be a little more expensive than selling your house through an estate agent. Usually, an auction house charges a 2.5 per cent commission, which is 2.5 per cent of the sale price of the property as the auction fees. However, some auction houses might even charge additional services fees which could range from £400 to £1200 plus VAT. Even if your property does not sell, you are liable to pay the auction fees as service fees.
4. A sale is not guaranteed
Just because you have registered your property with an auction house and the auction house is responsible for the marketing of your property, there is no guaranteed sale. Whether or not your property will sell is something that will only be determined on the day of the auction, so it can be quite unnerving for some sellers. While most auction houses have a high success rate, no auction house can guarantee the sale of your property.
5. Don’t forget about solicitor fees
A potential seller is required to hire a solicitor who will prepare a legal pack for potential buyers to go through before they make an offer. Usually, a legal pack costs between £350 to £500 depending on the fees of the solicitor. Once the sale goes through, the solicitor will then charge conveyancing fees to get the sale process completed from the buyer’s end. The conveyancing fees could range from £450 to £750, depending on the final sale price.
6. Be prepared for pre-auction offers
Before your property is auctioned, potential buyers will be allowed to view your property. So, be prepared for multiple offers before the auction even starts. Usually, these offers might be lower than the reserve price or the sale price that you had in mind, but again, there is no guarantee that your property will sell at the auction. So, accepting or rejecting a pre-auction offer has to be a calculated risk.
7. A deal is a deal
Once the winning bid is made, the deal is closed. The moment the buyer signs on the dotted line, the deal is closed. Essentially, the winning bid is the contract that implies the winner will buy the property. So, it is important to remember that once the deal has gone through, it’s official. There is no backing out at the last moment!