It’s time to sell your home and you want to know the quickest, easiest method which will also give you the best price with the least hassle.
Your two main options are selling your house at a property auction or in a traditional (estate agent) house sale.
Before you choose either, you should understand how each one works and the advantages and disadvantages of each one.
At a public property auction, your home is placed for sale and buyers have the opportunity to bid on it. Sometimes it's an online auction, but often, the house sells in a traditional auction house where all buyers are present. This can be more effective because one buyer can bid up the price if they really want the property.
Property auction fees
You'll have to pay the auctioneer’s costs for selling your home, and you may also have to pay for any advertising.
There are other key costs to a property auction:
- Commission. This is the big fee. On average, the costs of selling in a property auction are 2.5 – 3%+VAT. This can be negotiated down to 2% with some auctioneers.
- Entrance fee. To enter an auction you have to pay to play. On average, expect the entrance fee to be between £200 to £500+VAT.
- Auction legal pack. The auction legal pack will be at least £200+VAT.
- Other fees. Don't forget about the possibility of Capital Gains Tax and Inheritance Tax.
What to look for in a Property Auction company
You’ll want to find an auctioneer at a property auction who is knowledgeable about property, especially in your neighbourhood. HomeSellingExpert.co.uk offer free, impartial advice on auction sales and can be a great place to start your research.
If it's your first time, an auctioneer should be able to provide valuable advice to help you through the process.
You’ll want to have a reserve price so you don’t end up practically giving your home away. An auctioneer can advise on the right figure.
Tip: Attend a property auction as a bystander to see how one is handled and what the auctioneer has to say. Get comfortable in that environment before putting your house up for sale. Try to find a house that is similar to yours so you can get a better idea of what you might expect.
Advantages of selling a property at auction
For most sellers, the primary advantage is the completion of the transaction.
They don’t have to wait around until the buyers secure financing, because they must have the funds on the day of the sale or within a few days afterwards. After you begin the process with the auction house, it usually only takes about 30 days for the auction to be held or even less during slow times.
A potential advantage of selling your home through an auction is that buyers may bid up the price to even more than what you were hoping for. You could end up making a nice profit if you have a desirable property. Investors and developers often attend auctions, so you’ll be dealing with people who recognise the value of a property, which could increase the selling price.
Disadvantages of a property auction
Since you’ll be looking at cash buyers or those who have their financing in place, you may limit your options for a sale.
Only certain types of people feel comfortable participating in a property auction. Others who are perfectly capable of making the purchase will be intimidated and stick with traditional house sales.
Some buyers don’t like to bid for a house, which will limit your pool of buyers even more.
You can’t count on a bidding war, so you may end up barely meeting your reserve amount. You’ll have to calculate in the auction house fees and any mortgage you may have on the property when deciding on your reserve, so you could end up with not much left for your future.
What you need to know about selling in a traditional house sale
A traditional property sale is the traditional method of selling a home for most people unless they decide to list their home with an estate agent.
You advertise your home and wait for buyers to show interest. Instead of hiring an agent to sell your home, you can choose to do the job yourself. You’ll find ways to let buyers know your home is available. You may post a sign outside and take out an advertisement in the newspaper or go online to try to sell your property.
Interested buyers will contact you to find out more about the house.
Buyers visit your home to see if it’s the right fit for their needs. When someone is interested in the property, they send you an offer to buy. They offer certain terms that you can accept, modify or reject.
You'll be responsible for reading the offer and determining the terms and conditions. You can also contact a solicitor who will offer legal advice on the details of the contract.
Once you accept an offer, you must go through the process to close on the property.
The buyers often must complete their financing requirements to ensure they have the funds to purchase your home. This usually takes at least 30 days, but it may be twice as long if there are complications.
During this time the conveyancing process is conducted and the title deeds are checked to make sure it’s clear. The home may be inspected for any issues too.
At any time during the process, the contract may fall apart. While this doesn’t happen often, it occurs more often than you might think.
There are usually four main issues that cause a house sale to fall apart:
- The buyer could change their mind
- They could lose their buyer - meaning they can't purchase your home
- They might not get their mortgage funding.
- They gazunder you... Meaning they come back and reduce the price.
If the transaction doesn't complete for some reason, you’ll have to start all over and market your home again to find a new buyer. If you do sign the final papers and reach Completion then you receive your funds and are ready to move on.
Advantages of a traditional sale
The main advantage of selling your home through a traditional sale is the ability to attract a lot of buyers, which will mean you probably end up with the best price this way.
If there's success in numbers, then the more buyers who see your home, the more likely someone is to buy it. You have the option of choosing the person you want to sell your property to.
You can often get the price you want or at least know how much you’re willing to negotiate. This helps you prepare for the future and the next home you want to buy.
Tip: Price your home higher than what you actually want to receive as long as it is valued at the amount. This gives you room for negotiation because many buyers will want to offer a lower price anyway.
Disadvantages of a traditional sale
The primary disadvantage for many sellers is the fact that you’re at the mercy of the market.
If prices are low in your area, you’re likely not going to get more for your home.
You also have to wait until you find the right buyer and until the process is complete. It’s not uncommon for a home to sit on the market for months before it finally sells – often at a price lower than what it was listed for.
Tip: Don’t accept the first offer you get unless it’s exactly what you want. You usually have a day or two to consider an offer, which allows you time to entertain more than one.
You’ll also have to be flexible on showing your home, which may mean weekends and evenings spent elsewhere as you hope someone likes the place enough to put in an offer.
Even with the best planning, you can get surprised with delays or even the loss of a contract.
Because it can take so long to get your home sold, your life is on hold until you sign the final paperwork. You may not feel comfortable buying a new place until your current one sells, which will take even more time until you’re settled.
Estate agents can be hit or miss
Not all estate agents are equal, and in all honesty some will make your life harder rather than easier, and you may find yourself needing to pick up a lot of the slack if they aren't doing a great job.
Auction Vs Estate Agents: Making the right decision
Certain types of homes are better suited to auctions than in traditional sales.
These homes include:
- Repossessed homes
- Homes that require major renovations
- Homes that are extremely unique - and may be difficult to sell to an average buyer
- Land is often sold at auctions rather than in a traditional sale.
If you choose to sell the traditional way then you have more control over the process, including how much you eventually sell your home for, and who you sell for. Why's that important? In an auction sale you go with the highest bidder. But in a traditional sale you may have a cash buyer who's offered just a little less than a mortgage buyer. It might make sense for you to go with the slightly lower offer because the cash buyer will be able to complete more quickly than a mortgage buyer, and there's no risk of the mortgage company refusing to lend.
If you find a cash buyer through a traditional sale then the transaction may be completed in less time than you could sell your home at an auction. If they have the funds readily available and there's no hold-up on your end, you could have the sale done far faster than an auction. undefined
What you should do:
- Know your timeline for when you must sell
- Know how much money you must have to meet your goals
- Consider the qualities of your house and how
- Choose a solicitor who can help you with either a traditional sale or auction
What you shouldn’t do:
- Fail to advertise your home regardless of which method you prefer
- Make a decision in the heat of the moment, but think through your options
- Fail to check the reputation of an auction house or property cash buyer
If you desire to sell your home, you have several options.
Two of them include selling at a property auction or selling through a traditional sale.
But there's a third option.
Selling to Yes Homebuyers
You can sell your house fast to a company like us. There's none of the stress, hassle and uncertainty that comes with a traditional sale, and in fact it's the fastest and most straight-forward of all the options. There are none of the up-front fees, waiting, and unknown sale price that comes with the auction either.
We can value your home make you a formal offer within 24 hours. If you want to go ahead then we can complete in as little 2-3 weeks (or within a timeframe to suit you, if you'd like more time).
We do buy your home for less than its full value - click here to learn more about our fast house sale service - including about how much we offer.
Or if you'd like to get straight in touch then hit one of those big blue "Get An Offer" buttons and enter your details - then we'll be straight in touch and can begin discussing your home.