The Pros and Cons of Selling Your Home at Auction
1st April 2022
1st April 2022
Thousands of properties are sold at auction every year, and while they can be a popular way for buyers to find houses to buy, renovate and sell, they have recently started to attract more ‘mainstream’ buyers, as well.
But is selling your house at auction the right choice for your circumstances? We have looked at the pros and cons below – and be sure to keep to date with all of our South Hams auctions on our website.
One of the biggest frustrations of traditional property transactions is chains, as in the majority of instances, what makes or breaks a sale is out of your control and reliant on someone else successfully selling their home.
However, property auctions are chain-free, meaning that potential buyers must have proof of funds available, so you know whoever is bidding has the money readily available. This also has an added element of security that once the sale has been agreed upon, it will happen.
This goes hand in hand with the aforementioned point and is one of the biggest reasons why people sell their house at auction. Not only do you have a guaranteed date of sale (as long as your reserve price is met), but a buyer also has to legally purchase the property within a set amount of time following the auction – usually around 28 days.
This means you will have the money from the sale much quicker than you would through the traditional means, so if you are looking to make a purchase of your own, you are in a position to do so much quicker.
When you sell through an auction, you are always in the driver’s seat, because once a sale has been agreed, the buyer cannot back out of the deal without incurring financial or legal penalties. If you compare this to selling via an estate agent, a potential buyer can back out or renegotiate at any point up until contracts are exchanged.
When your property comes up for auction, there is a good chance you will benefit from increased levels of interest. If there are several buyers who are competing to win your property, it could spark a bidding war and drive up the price.
This isn’t always the case, but when it does happen, the increased competition is very favourable to the seller.
When selling at auction, you can never be sure just how much you will get for your property. You can specify a minimum reserve price, but if you have tactically set your reserve price – to strike up a bidding war, for example – you can’t be sure just how much over that reserve you are going to reach.
As a result, if you are selling to buy, this makes hunting for your next property more difficult as you don’t know your exact budget. If this is the case, you may wish to look at properties to rent for a short-term solution.
Although there will be a set date of when your house is at auction, there is no guarantee that your property will sell on that date. There are variables at play that are out of your control that can influence the sale, such as the listing order, the number of people at the auction and whether or not your property has been properly marketed - which shouldn’t be a cause for concern if you list with us.
While a quick sale is an advantage, if you are selling a property that you currently live in, you will need to move out quickly due to the completions legally having to occur within around 28 days. This will not be a concern if the property you are selling isn’t a place of residence, but it is certainly something to keep in mind that things will move quickly following an auction, so have everything in the house packed up and ready to go.
Once more, this could be seen as both a positive and a negative depending on the circumstances of the sale. Once the gavel has struck the sound block, there is no going back on the sale, even if the property has sold for less than you wished for.
If there is a change of circumstances and you decide that you do not wish to sell the property anymore, unfortunately, it is too late. For this reason, we recommend that if you are looking towards the auction route to sell your property, you need to be 100% sure that you do want to sell – you can’t use an auction to gauge interest on a property.
As you can see, there are both pros and cons to selling your home at auction, and in the end, it boils down to personal choice. However, should you have any further questions regarding auctions and their workings, please do not hesitate to get in touch with our auctions and professionals team.