An introductory guide to selling your property by auction
When you need to sell your property your first thought may be to go down the conventional estate agent route - yet auctions offer a very real alternative that are especially great for people who want a fast sale that reaches the property's natural market value.
The worry with anything unconventional is that a lack of information or understanding of how the system works could stand in the way of you getting the most out of it; as a result, your first step is to find out a little more about how auctions create such a great seller's marketplace, as well as how properties fit in as a subcategory.
The most that many people have seen of an auction may be a TV programme about selling antiques - something like 'Cash in the Attic' or 'Antiques Roadshow'. In these shows, people want to find out quickly how much their assets are worth and then often cash in on them at an auction.
Part of what makes auctions such fabulous places to sell things relates to time and competition. Having a strict deadline about when an item is going to be sold creates a sense of urgency among buyers, and seeing other people bidding on an item can inspire rivals to up their bid - bidding wars can occur anywhere from eBay screens to the top auction houses in the world.
One of the other important factors about an auction is that the people who are attending are - almost without fail - individuals who are there to purchase something. It is rare for people to go to such a sale thinking: 'There is no way I'm buying anything'. This means there is a 'qualified' audience present, not just a random group of people browsing.
When people buy something at an auction, there will always be a thought as to the sell-on value - will the buyer be able to sell it for more in the future?
Transferring this concept to the property world, it is easy to see why the process would have potential to work for both buyers and sellers. A group of potential buyers - who must have finance in place to bid - are gathered together, having seen details of several properties in the run-up to the auction. From there, it is the same system as in other industries - the urgency of an auctioneer's gavel and the competition created by other bidders can do wonders for a sale price.
Part of what makes selling a property normally such a stress is that it can be a very long and drawn-out process, whereas auctions are all about speed and ease. A short time-frame for showings is organised in the run-up to the auction, then the successful bidder will need to give a deposit (usually ten per cent) before leaving the auction venue and completing the sale within a month, with all bids being unconditional - once it is agreed, there is no going back on the decision for the buyer.
As with other auctions, you will want to place a reserve on your property - this is the minimum price you would accept for a sale to go through, although often the sale price can surpass this figure, particularly if your asset holds special potential for an investor to make money. It is free to list your property for auction, although there may be a fee charged by the agent that helps you advertise and process the sale.
Selling a property at auction
If you have decided that you would like to sell your property at auction due to the speed, ease and cost-effectiveness of this process, then the next step is to get your asset listed by an agent, who will be able to advise you on all aspects of the auction. Once you have organised a listing, you will need to specify a short time frame for viewings, then think about an appropriate reserve price.
Your agent will arrange advertising of the property and give you advice on reserve prices, but you may want to check with local estate agents about how much they think your property is worth. You could also consider going to an auction yourself - as an observer - just to see how it all works in practice. When the day arrives and the property goes under the hammer then one of two things will happen; either the reserve will be met and the property sold, or it will not be met and the highest bidder will be offered to match that price.
In terms of securing a successful sale, many experts suggest that the most popular properties at auction are either those which require work to be done on them (dilapidated properties or simply ones that could do with slight renovation), unusual spaces or assets in high-demand areas. The common element between these is that there is some potential there for the investor to put work in and sell the asset for more in the future. For you, as the seller, the important thing is that you seek to make your property look like a good investment and price it as such - from there, you can expect a quick and easy sale.