We’ve all seen the TV shows about selling a house at auction. The excitement of the auction house mounts while waiting for the gavel to fall. The room is full of people all fighting to be the next lucky owner of your home.
But it isn’t all smiles and success. The truth is that the TV shows only concentrate on a few stand out cases and the reality of selling your home at one is another matter entirely.
In the very volatile marketplace of the auction house, you can never be guaranteed a good price for your home, or of a sale at all.
With the housing market the way it is at the moment, up to 80% of lots at some auctions are going unsold. Auctions used to be the feeding ground of professional house buyers, all scrabbling for a bargain, but there are currently fewer investors out there, as they struggle to secure the funds to continue buying property and those with the cash are still waiting to see how far house prices will really fall.
If you do choose to sell your home at an auction, you will have to set a reserve price. If that reserve is not met, your house won’t sell, but you will still have to pay a listing fee to the auction house – and possibly pay your solicitor who may have been on standby during the auction in case your home sold.
Even if your house does sell at auction, the commission and fees you could end up paying sometimes exceed those of an estate agent, and current figures show that lots are selling for up to 40% below their market value.
If your house does sell at auction you then have only 28 days before you must hand over the keys and there is no opportunity to extend the timescale.
Selling your house at auction is not always suitable for all properties either. Some sell far better than others and if your home is situated some distance from an auction house you may struggle even more.
Your home will need to be listed by the auction house well in advance of the sale to allow potential buyers the opportunity to view your property. This could involve swathes of people traipsing through your home to get a glimpse of the potential bargain they believe they can guarantee at a house auction. Hours spent keeping the house clean for viewings – a particularly difficult job if you have pets or small children – and selling your home at a bargain price are probably not high on your to do list right now.
In conclusion, selling your home at auction may seem like a great and glamorous way to shift your pad but there are plenty of pitfalls to be wary of. Make sure you do your research and have a plan B for if it doesn’t sell.