The fastest way to sell your home

This is the quickest - and easiest - way to sell a property. There's no chain, no haggling and no risk of gazundering - so what's the catch?

If you’re trying to sell your home right now, you may be having a tough time of it. According to the latest figures from valuation company Hometrack, it is currently taking sellers just shy of nine weeks on average to sell a property, the highest level in more than a year. What's more, the proportion of the asking price that sellers are getting is also falling, and currently stands at 93.5%.

One option few sellers consider is selling via a property auction. Perhaps you see it as a last resort, full of properties going cheap either because they are repossessed homes or because they damp and poorly-built or in a terrible state of repair.

But if you’ve ever set foot in auction, you’ll know that’s far from the reality. While repossessed properties and doer-uppers do account for a significant portion of auction sales, there are a growing number of people choosing to sell their property via an auctioneer rather than an estate agent.

Why?

Speed and security

Speed and security are the two major benefits of selling at auction, particularly in the current market. There is no ‘subject to contract’ period, because you exchange legally binding contracts when the auctioneer’s gavel falls. A 10% deposit is paid on the day of auction and completion is usually 28 days from the auction.

This means that there is no risk of a buyer gazundering you. Plus, if the buyer pulls out later, you get to keep their 10% deposit! So there is a much reduced risk of the sale falling through.

The process can take as little as six to eight weeks from calling the auction house to completing on the sale. Such predictable timescales allow you to plan ahead in a way you could not if you put your home on the market in the traditional manner.

Target the right buyers

By selling at auction, you also have access to a wide range of actively interested investors. The auctioneers will market your property and this can be more effective than an estate agent. For example, Savills has a sale every six weeks and sends out its brochure to 15,000 subscribers. All of these are active investors who pay to receive the brochure, and other auctioneers produce similar literature for keen buyers. So you get your property details in front of specifically targeted and interested buyers.

Greater chance of selling

According to some reports up to 70% of auctioned property sells, a very high percentage considering the timescales. Auctioned properties can also fetch a good price, although the quick disposal of your property should be your main reason for using an auction, not because you think you will get a better price.

For example, an auction might suit those who are moving abroad, perhaps because they need a quick and uncomplicated sale. Those in arrears may also want to sell quickly. One auctioneer I spoke to said he had one client who managed to sell his property by auction a week before the bank sold it from under him.

What are the drawbacks?

There is a chance that your property will fail to sell and you waste the entry fee (typically £300 to £500) into the auction and any legal costs incurred (you may have to pay your solicitor to attend the auction for example).

You have no idea how much your property will sell for as auctions are completely dependent on the demand that day. You could sell your property for below market value, or you might get more than you expected.

You can, however, set a reserve price at whatever level you want to – but be aware that the auction house will suggest a price to you, and may not agree to take you on if you refuse and set your own price too high above that suggestion.

Finally, bear in mind that, like an estate agent, the auctioneer will usually take a percentage of the sale price as commission – usually up to 2.5%, although this is negotiable and it is worth shopping around.

What properties suit being sold at auction?

In terms of the type of property, anything goes, from terraced to water towers, flats to factories.

But it is true that properties that are unmodernised or run down are particularly well placed for auction sales. This is because a large proportion of the typical buyers at auctions are property developers who want to buy something that they can add value to by renovating. This includes commercial as well as residential properties.

Other properties that suit auctions are unusual or unconventional properties that do not fit the mould, or standard properties that may have covenants or other issues that prevent it from being sold easily via the normal route.

Of course, repossessed homes are extremely suitable as the property can be sold extremely quickly.

Meanwhile, properties that may not be suitable are those that are fully modernised where there isn’t a huge discount from the market value.

Choosing your auctioneer

One auctioneer told me not to trust any auction house that has a sale in August because not enough buyers are around and you won’t get a decent price. But how else can you choose?

Shop around. Commission is usually around 2.5% but it is definitely worth negotiating and you will also have to pay for the advertising and brochure costs. Check what you are getting for this money as brochures range from cheap and cheerful to extremely plush and professional looking.

Also find out how many people receive the pack and where else your property will be advertised. Some auctioneers have a paid for subscription list and these people are obviously better targets than people who receive a brochure they have not paid for, or perhaps even asked for. You want your property to be seen by as many people as possible, particularly in your target buyer audience.

Look at the other properties the auction house is dealing with and choose one that sells similar properties to yours. They will be experienced in this market and attract the right sort of buyers.

So, as always, it pays to do your research and shop around. But if you can pull it off, choose the right auctioneer and are lucky with demand on the day, then selling at auction could be a great way to beat the current market conditions.

In other words, your home could be going, going, gone before you know it! (You knew that was coming, didn’t you?)

This is a lovemoney.com classic article, originally published in August 2008 and updated

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