Sell House at Auction – The Complete Guide (2024)

Why Sell Your House at Auction?

Using an auction is an established way to secure a quicker sale relative to using an estate agent.

It can be a good option if your property needs a lot of repairs, it’s unusual or difficult to sell on the open market.

The good thing is that, once the traditional auction bidding is done and the hammer falls, buyers usually have to pay a deposit straight away.

The buyer must then complete the sale (usually after 28 days).  This is a legally binding contract.

If the buyer doesn’t proceed, they will lose the deposit and have to pay fees and other penalties. Therefore, the chances of a sale falling through are very slim.

Selling property at auction can seem like a daunting prospect, especially if it’s your first time.

However, in an attempt to attract a broader range of home sellers, the sector has moved on from stuffy auction rooms and intimidating sales tactics.  As a result, the process of sell house auction has become more transparent and easier to navigate.

Furthermore, there’s also the modern method of auction option which we’ll discuss further below.  Growing in popularity over the last year or so, it can be broadly described as a cross between selling on the open market and using a traditional local auction house service.

Pros and Cons of a House Auction Sale

There are many misconceptions about auction sales, especially when it comes to the speed at which things are done.

Unlike a ‘We Buy Any House‘ service, it’s not as simple as calling an auction house and expecting everything to be sorted quickly.

In terms of getting things prepared for auction day, the initial house sale process is similar to selling through an estate agent.

However, once a buyer has won the auction, things tend to be plain sailing and considerably more secure than an open market sale.

Nonetheless, it’s worth taking note of some of the pros and cons…

Pros of a Property Auction Sale

• Buyers are serious and generally more business-minded.  Compared to estate agency sales, you’re less likely to find time-wasters at auctions;
• You’ll be selling to a buyer with no onward chain, often saving a great deal of hassle and time.
• There is usually not as much ‘nit-picking’ compared to estate agency sales.  Property buyers generally know what they want and go for it if the property is suitable;
• Property buyers are usually less concerned about the property’s condition and as they’re used to buying properties with issues;
• You’ll normally have no issues when selling a tenanted property say if, for example, you’re portfolio is affected by the Section 24 legislation. Indeed, many auction buyers are landlords on the lookout for new stock;
• Inherited/probate and other types of problem / unmortgageable properties often get good results at auction. More landlords, for example, are likely to be selling properties that do not meet minimum EPC standards through auction (rather than doing the work themselves);
• Should you be at risk of repossession due to mortgage arrears, putting your house at auction is a great place to find a secure buyer;
• With highly capitalised investors out there ready and able to buy, selling a house at auction is a great way to sell a property portfolio;
• Selling a house at auction during or after a divorce/separation can be a good way to get things done quickly;
• You should be able to sell – albeit at below market value – if there are major structural issues, subsidence or problems like Japanese Knotweed;
• Due to strict legal obligations, buyers cannot suddenly drop the price between exchange and completion (known as ‘gazundering‘);
• There’s no need to worry about the best time to sell your property as auction buyers are actively looking all the time;
• You often deal only with cash buyers who effectively bypass the drawn-out mortgage application process.  This makes the whole selling a house at auction smoother;
• You’ll avoid the fall-through risks that often happen with estate agencies after properties are marked as Under Offer or Sold STC.

Cons of a Property Auction Sale

• The time for selling property at a traditional auction can sometimes stretch out to 3 or 4 months.  That’s why more sellers are moving towards online auction sales;
• Before the auction day or bidding period, there will be viewings, open days and possibly surveys/valuations. This can be a time-consuming and inconvenient process which may not suit your particular circumstances;
• Depending on the auction house you use, the costs of selling your property can be higher than using an estate agent.  Make sure that the auctioneer operates on a ‘no sale, no fee’ basis;
• There are hidden fees when the property sells that are only mentioned in the small print (see below);
• There is a fine line in terms of what the ‘reserve’ price should be.  For example, if it’s set too high, then people may not end up bidding;
• Like many estate agents, auction houses have been known to overestimate the value of properties to win business.  This places a risk on sellers if auction bidders don’t ‘bite’;
• When auction properties do not sell at the reserve price, there is a loss of time and money (unless a buyer emerges post-auction with an acceptable offer);
• If you have immediate debts to clear or need to stop repossession, the time it takes for an auction sale to complete may not be enough.

How to Sell Your House at Auction

Types of Properties Suitable for Auction

While all properties can be placed at auction, the most suitable type are those that can benefit from a swift and competitive sale.

Distressed properties that require renovation or historic properties that are listed are commonly auctioned.

Also, repossessed properties and development land with planning are appealing to potential buyers at auction. Commercial properties and those with rental potential are also commonly auctioned.

Properties that are vacant or with buyers who require a cash buyer sale also auction their property.

You’ll often also see inherited, buy-to-let, commercial, mixed-use properties and land sold at auction.

However, auction houses are trying to remove themselves from the reputation as being a place where the only problem and investment properties get sold.

These days, you’ll find people selling homes of all shapes, sizes, and states (especially at modern method auctions).

How to Find an Auction House

Across the UK, you can find a number of reputable operators via a simple Google search (‘property auctions’ is a common term).

You’ll also see auction houses marketing properties on sites such as Rightmove, Zoopla, On the Market as well as the more ‘niche’ and property auction news sites.

The auctioneer’s contact details are usually on the listings.  You may come across estate agents with separate departments that deal exclusively with auction sales.

There is also a growing presence of online auctions and traditional agents selling properties via their own platforms (who often do not advertise on the portals).

Offering a streamlined property sale through auction methods, the services of an auction house include property appraisals, advertising, legal support, and buyer vetting to ensure smooth, transparent transactions.

Ultimately, it’s important to ensure that the auctioneer you work with offers a smooth, timely and transparent transaction.

Be Prepared…

Some of the questions may include:

• Whether the property is already on the market.  Note that the auction house will usually want exclusivity to market your property (to avoid any conflicts of interest);
• The current level of mortgage and other secured debts against the property;
• Ownership status (i.e. if you own the property with other people, if the property is held under trust etc.);
• The condition of the house (including the age of the gas central heating system and electrics);
• If there are any legal complications you’re aware of;
• Approximate value and any surveys you may have undertaken in recent months/years;
• How urgently you need to sell.

The auction house will then download some paperwork from HM Land Registry and undertake some Anti-Money Laundering (AML) checks.

Then you’ll usually be given a rough (‘desktop’) estimate of the achievable value.  This is based on the auctioneer’s experience and professional opinion on current market conditions.  Note that you should take this valuation with a pinch of salt.

A valuer will then visit your property to see its overall condition and confirm other details.

Note that this is not always necessary and, provided you’re happy, it’s entirely possible to get your property listed without an auctioneer’s visit.

However, if your property has unusual characteristics or some commercial elements, a formal valuation may be necessary.

The auction house should then give you some time to think.  They will either call or arrange a meeting to confirm whether you would like to move forward or not.

How Much Does it Cost to Sell A House at Auction?

Although every auction firm works differently, it’s important to understand the fees before going ahead.

Note that some of the costs below apply to traditional auction house models and may be combined as one.  Also, remember to take into account the extra VAT you’ll need to pay.

Auction Fee (1.5 to 3% of the value of your property)

As with estate agencies, you will normally be charged a percentage of the sold price upon completion.  However, some auction houses will insist you pay a separate fee up-front.

You may be able to request that the buyer cover your legal expenses (mentioned in the Special Conditions).  However, this will probably end up being factored into the agreed guide price.

Marketing Fee (0 to 1.5% of the value of your property)

This is the cost of placing your property on the main portals (like Rightmove and Zoopla).

Part of this fee also goes towards producing the listing in the auctioneer’s catalogue and other marketing material used to generate buyer interest.

You’ll also be paying for the auction house to organise viewings and conduct open days at your property.

Room Hire Fee (0-1.5% of the value of your property)

Auctioneers will need a space large enough to conduct the bidding process.

The bigger and more reputable firms hold their auctions in central locations with good parking and accessibility.

Whilst the costs may be incorporated into the overall fee, they can be quite steep.  But the more people that are in the room, the better your chances of getting a good price when the property sells.

Online Sales Fees (0%)

Online sales occur on digital platforms whereby buyers bid on properties in an ‘eBay’ style selling process.  This auction process can run for days to ensure maximum exposure.

Note that it’s rare for an auction house to run an online and offline auction simultaneously.  Many are, however, offering ‘hybrid’ options (when the auctioneer invites bids on lots live on camera).

Conveyancing Legal Fees (set fee ranging from £500 to £1,500 depending on the solicitor’s location)

These may differ according to the size of the property, its tenure and whether there are other complications involved.

We’ve outlined some of the essential elements of the auction legal pack in our post on the modern method of auctions.  Note that the requirements are usually the same regardless of the type of auction.

Relative to standard conveyancing fees, most solicitors will also want to charge more for dealing with inquiries before the auction.  There may also be immediate issues to deal with on the day (which will come at a cost).

Some auction houses may suggest that the buyer covers the auction fees which, again, will usually be factored into the purchase price.

Auction Guide Price and Reserve Price

If you decide to proceed, you’ll need to sign a binding contract and agree to the terms of the sale.  This will include the auction date, fee structure (see below), marketing plan, conditions amongst other specifics.

Before signing, you may want to speak to the auctioneer directly about how he/she will conduct the auction bidding process.  Here, there’s a fine line between getting the outcome you want from the sale and allowing the auctioneer to do his/her job.

You’ll also need to decide on the guide and reserve prices of the house at auction.  To clarify the difference:

Guide Price

This is the price that the auctioneer will advertise the property for in the marketing material.

Depending on the timing of the market, this may be lower than the expected selling price.  This is a common tactic auction companies use to generate interest.

There’s a fine balance between getting you a fair price and also ensuring that people will attend the auction and bid.

Reserve Price

This is the minimum price that you’ll agree to sell the property for.  It will be kept between you and the auction house.

We would recommend being realistic about how you price your property, especially if there’s work to be done.  Here at Property Solvers Auctions, for example, we use RICS Red Book standards as the assessments are kept completely impartial.  Also, check out our post on how to value your house where you check much of the data (for free) yourself.

Depending on market conditions, prospective buyers will usually be competing amongst themselves in the auction room or via the online platform.  They will factor in their costs and risks and, in most cases, look for a discount on the open market value before placing a bid.

If the reserve price is not reached during bidding, then potential buyers can make a post-auction bid (on the day).  If you’re not happy with any offers you receive, the property can then be relisted at the next auction for a fee or you can withdraw it completely.

Note that the reserve and guide prices can be the same, but much will depend on buyer appetite for a property like yours.

Pre-Auction, Auction Day and Post-Auction

Here is an overview of each stage of the auction process…

Before the Auction

The sellers will work with the auction house to determine the value and a reserve price. The auction house will then promote the property attract interest from prospective buyers. This should – as a bare minimum – be on the major portals like Rightmove and Zoopla alongside existing investor databases and other individual channels.

Marketing periods tend to vary, but you should expect around 3 weeks to ensure the best exposure. The auctioneers will also schedule viewings or an open day for interested buyers to view the property.

They will also prepare an auction legal pack pre-auction and buyers will register if interested in viewing. The earlier this is done, the better.

Auction Day

On the auction day, the registered bidders will be allowed to put in their bids within a 48-hour period. When this bidding period ends, the hammer will fall and the auction sale price will be confirmed.

Note that online property auction houses tend to extend the bidding period.

The buyer will usually then be required to pay a reservation fee to secure the property.

After the Auction Hammer Falls

With 28 day (unconditional) auctions, exchange of contracts occurs immediately. In most cases, the buyer will need to pay 10% of the property’s sales price direct to the auction house who will transfer it to the solicitor.

With 56 day (conditional) auctions, the exchange contracts must occur within 28 days of the auction.

The Memorandum of Sale will occur and legal paperwork through the solicitors will be sent to the buyer and seller to complete. The sale will then be complete.

With both types of auction, the buyer must complete this sale or will incur the loss of their deposit and fee.

What is the Modern Method of Auction?

In its simplest form, the Modern Method of Auction is a cross between an auction and open market sale.  Some agents refer to it as a ‘conditional’, ‘hybrid’ or ‘combi’ auction.

Usually offered by an estate agent as an ‘add-on’ service, interested buyers usually have between 14 and 30 days to make their bids online.

Unlike normal auctions, the exchange of contracts does not happen instantly when the bid is won.  However, the buyer must pay a non-refundable deposit to show that he/she is committed to the sale.   This also means that the property is no longer marketed to other buyers.

The exchange and completion time is then stretched over a longer period (usually 28 days for exchange and another 28 days for completion).  This means that the buyers have more time to get their finances in place.

Using a modern method online property auction (as opposed to the traditional way of doing things), opens up your property to a wider pool of potential buyers.

Advantages of the Modern Method of Auction?

The biggest benefit for you, the seller, is that your fee is effectively shifted over to the buyer.

However, this often means that buyers steer clear of these types of transactions.  Those who decide to bid will take into account the fee and seek a lower price.

Of course, much will depend on how ‘in demand’ your property is and, as with standard auctions, you can fix your reserve price.  But remember that most buyers these days are savvy enough to know what houses are worth.

Others accuse this sales route as just a way for estate agents to earn a higher fee.  Some will cheekily insist that you pay a fee (so they get two commissions!).

Although it is arguably more secure than an estate agency sale, the smaller deposit requirement means that the risk of the sale falling through is also higher compared to a traditional auction.

On the Property Solvers auction platform, we split the fee between the buyer and the seller to create more of an even playing field.

Modern Method Vs. Traditional Method

A traditional method of auction does offer a secure, immediate sale completion. Cash-ready buyers prefer the quick turnaround of this type of auction.

However, with a modern auction, it offers a longer completion window which can attract a wider range of buyers. They have longer to view the property and ask questions before registering to bid.

Bidders do not necessarily need to be cash buyers so those with mortgages can also bid on some properties.

10 Tips for Selling a House at Auction

It is also worth taking on board the following considerations for selling a house at auction before moving forward:

Property Solvers Quick Sale / Auction Options

If you’re in search of a more efficient way to sell, we’d be happy to have a chat about both our cash home buying and online property auction services.

Regardless of which option you may choose, you can be sure to receive a reputable and full-regulated service from experienced industry professionals.

Quick Cash House Sale

With our sell house fast service, you directly with us (no middlemen) and we can get things completed in as little as 7 days.

There are also no legal or estate agency fees/commissions and we can offer zero-interest cash advances whilst the sale progresses.

Frequently Asked Questions