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Benefits of selling a property at auction

12th July 2018

The media is reporting that the property market is stagnating.

UK house prices barely grew in June, with homeowners reluctant to sell and few signs of a pick-up in activity according to monthly data from mortgage lender Halifax.

The same data also revealed that UK home sales were almost 5 per cent lower in the three months to May than the same time last year.

In these market conditions, those that want to sell often hold back, thinking that their property could be on the market for a long time.

This, in many cases, puts their life on hold. They might be trying to sell a home to downsize, or move to their dream home, sell a probate property to wind up a deceased relative’s estate, or sell an investment property due to the new harsher tax regime for landlords.

In a stagnating market, there is little movement of buyers and sellers and chains tend to have an even higher risk of breaking down.

Furthermore, the sale is not certain and guaranteed until exchange of contracts, so, even if you have a sale agreed subject to contract, there is a possibility that it will never get to exchange.

However, there is another way, and that is to sell your property by way of auction sale. The process is straightforward and you can find out how it works here.

Certainty

The number one reason to sell a property at auction is certainty.

When the hammer falls, the buyer has legally entered into a contract with the seller and committed to the purchase and must complete within the timeframe dictated by the terms and conditions of the auction house. This is typically between 10 and 30 days from the fall of the gavel.

Speed

Which leads to the second benefit, and that is speed.

The legal pack is available prior to the auction, meaning that most of the sales particulars and documents have already been collected ready for the buyer’s solicitors.

Exchange of contracts typically happens on the day of the auction with completion on the specified date. So once the hammer falls, you know that the sale is set to complete within a given timeframe.

Knowing the timeframe of an auction sale can help the seller time when they sell the property, once again give some certainty to being able to make future plans.

High success rate

Research suggests that 75 to 85% of all lots sell when submitted via the auction format.

Cash buyers of property

Auctions tend to be the domain of cash buyers and property professionals, so you won’t have the issue of someone waiting for a mortgage offer or a buyer relying on bank finance. This simplifies the whole conveyancing process as well.

Cash flow

On the day of the auction sale, the buyer has to deposit 10% of the agreed sale price. This can assist with cash flow if the seller is struggling with debts, for instance.

No viewings

You can state in your auction conditions that you do not wish to allow internal viewings. This may suit someone who has a tenanted property, or who is living at the property and has valid reasons for not wanting viewings, such as being a shift worker, having a new baby in the house, or suffering with illness.

Or you can agree a single “Open Day” when any prospective bidders can come and view your property with the auctioneer.

Achieving a good price

The auction method works well for sellers because it is a very competitive environment. If more than one person is interested in your property, then it becomes a bidding war and the price goes up.

However, in respect of a fast sale, traditional auction sales may not fit with your plans. Auction houses typically run auctions every quarter, meaning that your local auction house might not have an even coming up soon.

Furthermore, deadlines have to be met in getting a property listed at an auction because of the auction catalogue, so if you miss the deadline for this, then you have to wait until the next auction.

That is one of the key differences between off-line and online auctions. At Open Online Agents, you can list your property any time and set the duration of the auction to suit your circumstances.

If you are in need of a very quick sale, you can reduce the time of the auction so that we invite motivated buyers immediately.

Furthermore, if your property is sold at a physical auction, you will need to attend in person with your solicitor, which will incur costs and also your time.

With an online auction, there is no need for you to attend and all the legal processes take place via online portals. Furthermore, a physical auction lasts one day, whereas an on-line auction can last weeks, and people can bid 24/7/365 from anywhere in the world.

Selling properties via online auction is gaining traction in the UK, so if a quick sale is needed, then it is definitely a route worth considering.

Selling your property by auction is easy. Simply call us on 0800 044 8888 to register your property, we’ll ask you everything we need to know and conduct a desktop valuation – and discuss your timescales. We’ll also arrange for quality photography and floor plans to be drawn up – all to help your sale and get the best price. And all at no extra cost.

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