With auctions becoming mainstream and the many programmes on TV showing people that they are nothing to be afraid of, more and more people are thinking - is my property suitable for auction?
Contrary to popular belief, most properties are suitable to auction - but it's not always the most appropriate method. If you have a conventional house in good condition, are not in a particular hurry, haven't found somewhere to move to yet and want to open up the market to the largest number of people, then the normal method - which is known as Private Treaty - is the best way to sell because buyers who are in chains will be able to buy it, which they cannot do at auction.
But that still leaves a very large number of properties which should sell better at auction.
Auction is a very precise way to sell property. Your house is marketed heavily for around 5 weeks. At the end of this period the auction takes place and, as long as the reserve is met, as soon as the gavel or virtual gavel falls, that is the point of exchange of contracts. There is not going back for the buyer who pays 10% of the purchase price immediately and completes a month later.
So should you go to auction?
If your property needs a lot of work doing to it, then auction bypasses all those people who will otherwise offer on it, get their surveyor round who finds every fault imaginable with it and then renegotiate the price or drop out. In an average or bad market, you may achieve less, but you receive the benefit of a much quicker and a secure sale. In a good market you will realise at least what you would have achieved months later normally.
There are people out there who only like to buy at auction because it is a very transparent method of sale and they know they will be paying market value for the property. These are typically small builders and investors. If your house is structurally unsound and difficult to mortgage, then auction attracts these people who have the money in the bank to buy straight away, as well as the confidence to make that calculated risk, and the resources to overcome any issues.
Properties that are unusual are ideal auction candidates. A house with panoramic sea views which is a bit of a one-off will attract people with money from wealthier parts of the country who will bid against each other; an old toll house on a busy road which will provide a quirky home for someone but which is impossible to value; an old village or church hall with potential to convert into a dwelling; all these are best to offer for sale at auction.
Importantly, when a family member has sadly died, sometimes the beneficiaries will not agree on what the family house is worth. The courts hold that auction is proof of the best price having been obtained for a property, as long as it has been marketed for at least one calendar month. This takes the stress out for the family and is why many solicitors will recommend auction in these circumstances.
If you're lucky enough to have a piece of land suitable for development, then auction will pitch bidders against each other and could result in a price much higher than expected to be achieved. Similarly with farmland, woodland and small paddocks which are types of land in short supply, auction can prove profitable.
If you are a public organisation, charity or large company when transparency is all important, then auction is the correct method to use because everybody knows what everybody else is bidding and there are no secrets deals to be had.
Last but not least, clients who want a quick and secure sale should sell at auction. Many of us do not want to wait months selling our homes with all the insecurity that entails. Auction gets around that in one fell swoop. We might achieve a bit less, we might achieve a bit more, but we know that once that gavel falls the buyer cannot pull out (or in the very rare event that he or she does we can keep the 10% deposit) so the stress is minimal and we can move on quickly.
So, if your property is one of the above, then you should definitely look at auction as the best method of sale.
Our auctioneer, the esteemed Richard Copus is a Fellow of the National Association of Valuers & Auctioneers, an Honoured Fellow of the National Association of Estate Agents, and an industry trainer with Propertymark.
