In the past, property auctions have been seen by many as a last resort for selling property. Often associated with sellers who are in financial difficulties and looking for a quick sale, many property owners would not even consider selling at auction.
However, the perception of property auctions is slowly evolving; with an increasing number of sellers opting to make use of this channel for the sale of both residential and commercial property.
So, what is it about property auctions that is persuading more sellers to choose them over the conventional method of sale?
Firstly, and a point that we have already touched on, is that that auctions provide the best opportunity to sell your property quickly and with minimal fuss – a huge bonus for sellers that require the equity from their property in a short space of time.
Not only does the auction improve the chances of a quick sale; there is also little chance of the buyer pulling out of the purchase at the last minute, as they would lose their 10% deposit which must be paid immediately after the hammer falls. As a result, selling at auction can actually be a much less stressful route than the conventional method.
In addition, a well-run auction that has been effectively publicised has the potential to reach a much wider audience. Increased interest of course has the potential to drive up the price of the property; meaning sellers can end up with a greater profit as well as a quick sale.
A final benefit that is persuading many sellers to use property auctions is that they tend to attract buyers that are looking for renovation projects. Often properties that are run down and need a lot of work will receive little interest when marketed through traditional agents. Yet in the auction house they suddenly become sought after as investors look to secure a property that can yield a decent return once it has been updated.
Tips for sellers
If you are considering using an auction to sell your property then there are a few steps that you should take to ensure that the process runs smoothly and that you get the best possible deal. The first and perhaps most important step is to select a well-established and reputable auctioneer. An auctioneer with a long standing history in the business is likely to have a more extensive database of potential buyers, which can only help interest in your property come sale day.
Once you have chosen your auctioneer you can then discuss with them the reserve and guide prices. The reserve price is the lowest amount that you are prepared to accept for the property and so it must be given much thought, as once the hammer falls, the property is legally sold.
The guide price serves to act as an indication of what the auctioneer expects the property to sell for and should also be given careful consideration. Ideally the guide price will be low enough that it entices bidders to attend the auction, but not too low that it puts possible buyers off once the price is invariably driven up during the bidding process.
Tips for buyers
If you are considering bidding at a property auction then there are a few steps that you should take first, irrespective of whether you are looking for residential or commercial property. There are still a surprisingly high number of prospective buyers that will make blind bids on properties having done little or even no research.
This is a risky game and you should always find out as much about any lot that you may be interested in before the day of the auction.
Firstly, do some research into the auctioneer to ensure that they are a reputable firm and are running auctions on a regular basis. Be wary of auctioneers that sell a relatively low percentage of lots, as this is an indication that they are valuing the property too high. Also, be sure that they are experts in the field you are interested in, be it residential or commercial.
(There are of course some auctioneers out there that specialise in both areas.)
Your next step should be to visit any properties that you are interested in to take a look for any obvious problems to the structure. You may even want to take some time to speak to the neighbours and locals to get a feel for the area. Once you are fully aware of the state of the property, you can then do some further research and check on the prices of comparative properties.
If you are intending to rent the property out then it is wise to speak to local estate agents to get an idea of a realistic rental income.
Having carried out this research you should have all the required information to decide whether you agree with the guide price and what your limit is. Be sure to decide upon a limit and stick to it – many bidders get caught up in the excitement of an auction and end up overpaying because they cannot let go of a lot.
A guest post by Eddisons – specialists in property auctions across the UK.
No related posts.