If you need to sell quickly, the turnaround time when selling at auction is normally a far speedier process than when selling traditionally which is technically termed “Private Treaty”.
Selling a property by private treaty leaves you open to possible breaks in the chain and the sale falling through, as no one is legally obliged to proceed until exchange of contract. This may mean starting all over again with a new buyer, which is both costly and time consuming. When selling at auction, there is no chain and the buyer will forfeit their 10% deposit if they are unable to proceed.
Auctions attract a variety of buyers, traditionally investors and property developers, who are often able to make cash purchases. Auctions are seen as a great way to snap up an affordable property and while buyers are often in search of a bargain, if there is a lot of interest in your property it could reach a higher price than on the open market.
The ‘guide price’ and ‘reserve price’ must be set prior to advertising the property. The guide price is printed in the catalogue and displayed in the on-line advert and gives buyers a general guide as to what the property is expected to sell for. The reserve price is hidden from prospective purchasers. This is agreed privately between you and the auctioneer and is the lowest amount you’d sell the property for. The chances of it exceeding its reserve price are fairly high, especially if the property is in a popular residential location.
Auctioneers put up sale boards and show potential bidders around the property. They use newspaper and magazine adverts and produce glossy catalogues in order to gain maximum coverage for your property before the auction.
You will need to have your solicitor on standby well before the auction. They will want to see the auctioneer’s general conditions of sale and the description of the property, making sure that any disclosures that need to be made are fulfilled within the narrative in the catalogue or any amendment sheets that go with it.
You’ll also need to instruct your solicitor to prepare the required documents prior to the auction. Ask them to prepare an auction contract, which includes replies to initial enquiries and the results of any searches carried out, plus a draft contract and Evidence of Title (proof of your ownership).
As the vendor to satisfy the requirements of the anti money-laundering act, proof of identity will be required and also an energy performance certificate (EPC) will need to be compliled to go in the legal pack. The auctioneer will keep you informed of the level of interest in the property and also process any pre-auction offers. You must inform the auctioneer of any circumstances regarding the property which change before the auction or if you are withdrawing the lot.
Before the auction commences officially, time is set-aside for potential bidders to enquire as to any last minute changes. Final amendments to Catalogue details will be circulated to those attending. Each lot is described prior to being offered, and hopefully after competitive bidding will be sold on the fall of the gavel, with contracts being effectively exchanged at that point. The clerk or auction administrator will instruct the buyer on signing the sale documentation and transferring the 10% deposit to be paid on the day. Some auction houses also provide the services of Internet and telephone bidding to compliment the bidding in the auction room itself on the day.
If your property doesn’t reach its reserve price and a sale is not agreed during the auction, you are able to approach the highest bidder via the auctioneer or your solicitor and may be able to negotiate a mutually acceptable deal with them directly. Some auctioneers will provide one free entry into their next sale.