You want to sell your property, so you go to an estate agent, right? Not necessarily. We look at the increasing popularity of property auctions
When it comes to selling property, traditional routes like private listings and using estate agents have long been the natural choices. However, property auctions have become an increasingly popular alternative method of selling.
Though reading the comments on our post Dealing With Property Auction Issues shows that it’s not always plain sailing.
The advantages of selling through a property auction
Property auctions offer numerous benefits over traditional routes to market, including their speed, competition, transparency, and the potential for fetching higher prices.
Speed of transaction
One of the primary reasons for selling property at auction is the speed at which transactions can be completed. Unlike the traditional route, which can involve lengthy negotiations, property auctions set a specific date for the sale.
This time-bound approach attracts motivated buyers who are ready to make quick decisions, resulting in a streamlined sales process. The condensed timeline from listing to closing can be particularly advantageous for sellers who need to dispose of their property promptly, such as those facing financial issues or who need to relocate quickly.
Advantages of competition
Property auctions create a competitive atmosphere that can drive up prices. Interested buyers participate in open bidding, which often fosters a sense of urgency, encouraging bidders to submit higher offers.
The competitive nature of auctions can lead to a situation where multiple bidders contend for the property, potentially surpassing the initial market value. As a seller, this means you have the opportunity to secure a premium price for your property.
Auctions: a transparent system of selling
Auctions offer a transparent and fair process for both buyers and sellers.
All interested parties have equal access to information about the property, including its condition, legal status, and other relevant details. This transparency builds trust amongst potential buyers, and they can make informed decisions based on the information provided in the property legal pack.
What’s more, the auction format ensures that the property sells to the highest bidder, leaving no room for negotiation biases or under-the-table deals.
Increased opportunities for marketing
Auctions provide an excellent platform for marketing and showcasing your property to a wide audience of potential buyers.
Auctioneers use various marketing strategies to generate interest in a property, including online listings, print advertisements, promotion to their email lists, and other targeted promotions. This extensive exposure ensures that your property reaches a diverse range of buyers, including investors, homebuyers, and real estate professionals who attend auctions regularly. The heightened visibility can attract a larger pool of qualified buyers than traditional avenues, increasing the chances of securing a favourable deal.
Auctions provide you with control and flexibility
Selling property at auction offers sellers a level of control and flexibility throughout the process. As the seller, you can set a reserve price, which is the minimum amount you are willing to accept for your property. This ensures that you maintain control over the final sale price, ensuring that your property is not undersold.
Additionally, the auction timeline allows you to plan ahead and be prepared for the sale, allowing you to align your personal circumstances accordingly.
The Modern method of auction
In the modern era, auctions have increasingly moved online. They still follow the same basic structure, and are still a gazumping-free way to transact. However, there are some key differences between the Modern Method of Auction and a Traditional Auction.
One big difference is that when the virtual hammer falls in a Modern Method auction, the buyer pays a reservation fee during which the buyer has time to collect the funds to complete the transaction. The timescale for this is usually 56 days meaning that from the auction date.
The extended timescales involved in the Modern Method mean that auction properties are no longer the preserve of the cash buyer; there is time to arrange a mortgage and the associated valuation and survey.
Potential buyers still have to pay their non-refundable reservation fee, but there is less for them to lose than in a traditional auction.
Golden rules for property auctions
Whether you are a seller or a buyer at a property auction, it is vital that you approach the process with your eyes open.
Read the contracts you are signing thoroughly, and make sure you have appointed your conveyancing solicitor well in advance.