by Mark Johnston
Selling a property at auction.
A property auction is designed to provide a way of selling properties quickly and more easily than on the open market.
There are certain types of properties that are more suitable to be sold at auction than others, these include:
– Houses that would be hard to sell by traditional means as they are in a bad state of repair and therefore may need substantial investment
– Reposed houses as they usually need to be sold as quickly as possible to cover the former owners debts
– Unconventional properties such as lighthouses and churches
– Properties that are in high demand as the price paid for such properties at auction can often exceed their estimated market value.
So why choose and auction, well David Sandeman, of Essential Information Group (EIG) which provides data from across the nations auction rooms, suggests “against a backdrop of continuing economic difficulties and a slow property market generally, the auction market has fared relatively well over the last 4 years and recently has shown some signs of tentative recovery”.
Once deciding that auction is for you the next step is finding the right auctioneer, one who offers property similar to yours with in the same price range. Auction houses fall in to 2 groups, local and national.
A national auction includes 100s of properties from around theUKand a local auction is only likely to attract purchasers from with in the region.
When choosing an auctioneer it is worth bearing certain things in mind such as:
– accessibility, so purchasers do not have to travel long distances
– venues, strategically located
– market, regional auctioneers have specific knowledge of the area
Before agreeing to work with a particular auctioneer review their terms of appointment as they will charge for advertisement in brochures and catalogues, which will have to be covered even if the property does not sell and also their commission, this is usually around 2.5% of the sale price.
The next step is to appoint a property solicitor; they will prepare contracts, a legal pack and will also set out any special conditions that might be pertinent to the sale. A point worth remembering is that the solicitor will have to be present at the auction in order to sort out any last minute irregularities and answer questions.
Now is the time to decide on a guide price for the property if you have not already done so, this is the lowest price that you will accept for the property. A few days before the auction, the auctioneer will contact you to agree a reserve price; this is a confidential figure below which the auctioneer can not sell the property.
When the hammer falls, the sale is official and legally binding and the completion date is usually 20 working days from the date of the auction.
The disadvantages to selling via auction are that no one can ever know how much the property will sell for. An auction is a highly volatile marketplace; therefore if there is no demand on the day of your sale, the property might up selling below its market value.
Also as many fees have to be paid upfront and regardless of if the property sells, selling at an auction can end up being more expensive than selling via an estate agent.
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