For most people, selling a property means doing so on the open market, usually through a local estate agent. This method works well enough but has some well-documented drawbacks; the often painfully slow progress and the high risk of a sale falling through to name but two.
An auction can eliminate these issues by offering a fixed completion date and a fall-through rate of virtually zero, but many sellers are understandably reticent, especially if they don’t know anyone who has had any experience of auctions; personal recommendations are so important.
At SDL Property Auctions we speak to a great many sellers and encounter some very fixed but outdated ideas about auctions. We are always happy to dispel people’s misconceptions and also let them know that they no longer have to choose between a familiar estate agent and an auctioneer, but can sell their property through both at the same time.
Here are the most common myths:
Auctions are for desperate sellers
Many people still see auctions as a last resort, or for those who desperately need to sell. While it’s true that many people turn to an auctioneer after failing to sell their property by private treaty, it is also true that an auction sale could have saved them from months of stress and uncertainty if they’d taken that route in the first place. We frequently help estate agents get results for sellers whose transactions have fallen through – sometimes for a higher price.
Auctions are ideal for sellers in a hurry as a property can be on our website within hours of the first conversation taking place and the time from a sale being agreed to completion can be as little as 20 working days.
However, you don’t have to be desperate or in a hurry in order to benefit from the speed of an auction sale. More and more sellers are coming to us in the first instance, secure in the knowledge that we’ll achieve a fast, certain sale without compromising on price.
Auctions are just for property wrecks
It’s true that most auctions will feature properties requiring modernisation, but these are just a part of the picture. Any type of property can sell by auction and among the 200-plus properties we sell each month are well-presented family homes, luxury apartments and much more. Variety is key in an auction and helps to draw in a huge range of buyers.
Selling by auction is expensive
We are always delighted to let property owners know that there don’t have to be any big fees when selling by auction; in fact, they can choose to pay no selling fees at all. Every property sale incurs some legal costs so sellers do need to pay for a legal pack, which is usually around £270, but the auction fees can be passed on to the buyer if required. Alternatively, the seller can choose to pay the commission, leaving the buyer with no fees, or they can be split 50/50.
It’s all about choice. There are several options available and our team is experienced in advising sellers on the most suitable way of getting the best results for each property and each seller’s circumstances.
Auctions are for bargain properties
Many people are convinced that an auction means selling their property below market value but there is no risk of a seller being forced to accept anything less than they are happy with because they agree a reserve price – the lowest price they are willing to accept – and the property will not sell until this reserve is met. As the guide price must be within 10% higher or lower than the reserve price, this gives potential buyers a realistic idea of the reserve.
I believe this myth stems from the fact that an auction valuation will almost always be lower than an estate agent’s valuation. However, in both cases these are just starting figures. While the asking price on the open market is often negotiated down by the buyer, the guide price in an auction is driven up by competitive bidding. The final selling price is often around the same, although every one of our live-streamed National Property Auctions delivers some nice surprises for sellers.
Auction experts know that pricing a property attractively will draw in more bidders and ultimately result in a higher final sale price – which can be more than the price it would have achieved on the open market. In fact, an auction is the ideal way to discover a property’s true worth, as competitive bidding will achieve the best price in that day’s market.
Auctions are only for cash buyers
This myth deters sellers because they believe their property will be marketed to a limited pool of buyers. But auctions are no longer the domain of the cash rich. In fact, only around a half of our auction buyers use cash; the remainder fund their purchases with bridging loans or mortgages. These finance choices open up the audience of potential buyers, driving up prices for sellers.
Auctions are, however, a serious commitment because with an unconditional auction sale contracts are exchanged on the fall of the hammer, a deposit is required immediately, and completion usually takes around 20 working days. Buyers must therefore be able to access the full amount within the agreed timescales, which is why their finance should be in place before bidding.
If a seller prefers to give buyers more flexibility and time to arrange finance, they can choose a conditional auction sale, which allows a longer completion time – usually up to 40 working days. This can open up the auction to more buyers, possibly leading to a higher selling price.
Despite the clear benefits of auctions, we still have a long way to go in dispelling these myths. But we are working hard to educate people and help them discover a faster way of selling property, which is stress-free and doesn’t mean they have to compromise on price.
*Andrew Parker is the managing director and auctioneer at SDL Property Auctions