How to sell at auction
DE C I D I N G WHETHER to sell by public auction or private treaty is about what is right for the seller. Auction, however, does provide a higher degree of certainty, which can be very appealing, especially if time is a factor, as once the gavel falls, a legal and binding contract is made and completion is usually within four to six weeks.
CHOOSING AN AUCTIONEER
Your decision will be based on factors such as the auctioneer’s expertise and location, costs and how the property will be marketed. Sale costs usually depend on lot size and location and are normally split between a catalogue entry fee and a sale commission based on a percentage of the sale price.
Most auctioneers still produce a printed catalogue which is widely distributed and advertised in the press. In addition, email, online advertising and social media are used and, as with a private treaty, sale viewings will also be arranged before the auction.
HOW DO WE DECIDE ON THE GUIDE AND RESERVE PRICE?
The reserve is the agreed minimum price a seller will accept for the property — it is kept confidential between seller and auctioneer. The guide price should reflect the reserve and thus what the property might be sold for. Keep an eye on the auctioneer’s website for any updates, as the reserve and guide can change before the sale.
WHENISTHEPROPERTYSOLD?
Some sellers may be tempted to sell prior to the auction. Equally, if a property fails to sell on the day, there is every chance it can be sold post-auction, at which stage the auctioneer is at liberty to disclose the reserve. Assuming the property goes to the room, however, all the would-be purchaser has to do to buy your property is to keep bidding. If all goes well, bidding reaches or exceeds the reserve and the bang of the gavel is the signal that you have sold your property.
WHO DOES THE SURVEY?
The adage “buyer beware” is slowly being whittled away by consumer protection legislation, meaning that sellers should now disclose details they are aware of that may materially affect the value of a property. However, it is still important that buyers undertake their own due diligence, reading all documentation and satisfying themselves as to the condition of the property. Inspect it, if need be accompanied by a surveyor or a builder — and allow a contingency for unforeseen costs.
WHAT NEXT?
The successful buyer will be asked by the auctioneer to produce ID, sign a memorandum of sale and pay a deposit, usually 10 per cent of the hammer price. It is also usually a requirement for the buyer to insure the property straight away. Then, all that remains is for the buyer to find the balance of the purchase price, ready for completion. Philip Waterfield is a chartered surveyor with approaching 35 years’ property experience including 20 years as a director of Strettons