With people huddled around their tv sets in increasing numbers buying all sorts of goods through QVC, Bid-up TV, bid-down TV, etc., it is hardly surprising that auctions are also becoming a popular way in which to sell houses.
So, what are the advantages of selling your home by auction and what are the pitfalls?
Auctions of real property (that’s houses to you and me) are governed by different laws from normal property sales legislation. Most people are used to putting their property on the market for sale, waiting a few months to find a buyer, arranging a sale, having the buyer’s surveyor visit, the buyer then reducing their offer or withdrawing and eventually, once a suitable purchaser has been found, waiting an age for the solicitors to effect exchange of contracts. None of this can happen in a sale by auction, which is why more and more people sell this way.
Public auctions are the norm in England and Wales (Scotland is different, as with many things). Once the auctioneer has received instructions to go ahead and sell a client’s property, there is an intensive marketing campaign, usually between 5 to 7 weeks, with all stops being pulled out by the auctioneer. A lot of interest is usually generated with special viewings days set to accommodate interested parties.
Courts take a sale at auction to be legal proof of market value, so all auctioneers advertise as widely as possible to attract as many potential bidders as they can.
At the end of the marketing period, the auction takes place. Hopefully in a crammed room will lots of would-be buyers champing at the bit!
The auctioneer then uses his particular skill in encouraging bids from the floor. Once the reserve, which is known only to the vendor and the auctioneer, has been reached, the auctioneer can sell, and once there are no higher bids, he or she brings down the gavel with a thump and the property is sold. And that means SOLD, not under offer or sold subject to contract. There is no going back for the buyer. He pays his 10% deposit there and then and must complete usually 4 weeks later.
In the very unlikely event that he should renege on the deal, the seller keeps his deposit. The reserve is a fallback to protect the vendor from underselling his home; that reserve is usually set slightly below anticipated market value as a definite sale at auction is better than a long drawn out one otherwise at a, maybe, slightly higher price. All very simple, isn’t it?!
It is simple and auction is by far the most successful way to sell houses where the owner wants a quick sale for whatever reason. As auctioneers, Richard Worrell, Nick Wood and I would love to see everybody sell this way, but we have to admit that some houses are not suitable to be sold like this. Ordinary homes which are mortgageable are often sold to people in chains, and those people are unable to exchange contracts in the auction room if they only have a sale agreed on their property.
Richard Copus FNAVAFNAEA (Honoured) CPEA