Selling your home at auction

If you want to sell your home quickly, you could consider selling it at auction. This page explains the selling process.

What kind of properties are sold at auction?

Any kind of property can be sold at auction. However, properties are most likely to be sold this way because:

• of repossession, bankruptcy, or to clear the seller's debts

• the owner has died 

• the property has been left empty

• they are in need of some or a lot of renovation work

• they are very unusual and difficult to value

• they are likely to generate a great deal of interest.

What are the advantages of selling your home at auction?

• You can usually sell your home much more quickly at auction than through traditional channels. The buyer's solicitor carries out much of the conveyancing work before the auction takes place, which means that when the auctioneer's hammer falls, the sale is almost completed. You should then receive payment for the property within 28 days.

• If there is a lot of interest in your property, it could reach a higher price than it might on the open market.

What are the disadvantages?

Your home may not reach the price you want or need. If you have set a reserve price, you won't have to sell for less than a certain amount, but you will still have to pay the auctioneer and your solicitor (see below).

How do I find an auctioneer?

You can find contact details for local auctioneers by searching on the internet or looking in the Yellow Pages.

The auctioneer should be a member of a professional organisation such as:

• National Association of Valuers and Auctioneers (NAVA)

• National Association of Estate Agents (NAEA)

• Royal Institution of Chartered Surveyors (RICS)

• Association of Residential Letting Agents (ARLA)

It's important to find the right auctioneer for your property. Unless yours is a particularly interesting property that will generate a lot of interest, your home will probably be sold as one lot amongst many. Ask to see the auctioneer's most recent catalogue and see how the properties listed compare to your home. If it's not in the same price range or is of a very different type or quality, you're unlikely to find a buyer.

What do I need to ask the auctioneer?

Once you've agreed with the auctioneer that your property is suitable for their catalogue, you'll need to discuss:

• the sale date - remember, if you sell your home, you'll need to be out within 28 days

• viewing arrangements and access for surveyors

• the reserve price

• their commission and charges.

Setting the reserve price

You'll need to fix a reserve price with the auctioneer. This is the lowest offer you're prepared to accept. If the bidding doesn't reach that price, your home won't be sold. Your solicitor should be able to help you decide the price to set.

The reserve price you set will depend on:

• the value of the property

• the condition of the property

• the current housing market

• if you need to cover your selling costs.

Auctioneer's commission and charges

Ask the auctioneer:

• how much commission they charge (usually this is around 2.5 per cent plus VAT)

• how much advertising and promotion of your property will cost

• how much you'll have to pay if the property doesn't sell.

What does an auctioneer do?

An auctioneer should:

• advertise your property in their catalogue

• prepare particulars for your property, with photographs and other information

• arrange for potential buyers and their surveyors to view the property

• prepare an information pack with details of the title deeds and any other conditions of the sale

• arrange the sale of your home on the day of the auction

• sign the contract for the sale on your behalf

• send the money from the sale to your solicitor.

Some auctioneers also produce a seller's pack, containing a survey and other information about the property.

What does my solicitor need to do?

Your solicitor will need to:

• arrange for a home report to be prepared (see below)

• obtain the title deeds to the property and information on any conditions of sale, so the auctioneer can put together a sale pack for prospective buyers

• be present on the day of the sale to answer any last minute queries (remember, they will charge extra for this).

What is a home report?

From 1 December 2008, anyone putting a property on the market must prepare a home report. This is a pack of documents, including a survey and energy report, that provides potential buyers with more information about the property. If you have a solicitor, they will prepare this for you, but if you don't, you'll need to commission a surveyor to carry out the survey and energy report and put the pack together yourself.

Find out more about home reports.

What if I receive an offer before the auction?

You may receive an offer before the auction, especially if you ask for the property to be listed in the auctioneer's catalogue as up for auction 'unless previously sold'. If you do receive an offer, you'll need to decide whether you want to:

• accept it, because it will save you the trouble and expense of the auction

• turn it down, in the hope that you'll get a higher offer on the day of the auction.

What happens on the day of the auction?

On the day of the auction, the property will be sold to the highest bidder. The property becomes theirs as soon as the auctioneer's hammer falls. The buyer will sign the contract then and there, and the auction house will sign on your behalf. The buyer will then pay a 10% deposit, with the balance usually following within 28 days.

What happens if my home doesn't reach the reserve price?

If the property doesn't reach the reserve price, you may be able to sell it afterwards to the highest bidder. Speak to the auctioneer and your solicitor if you are in this situation.

Unfortunately if your home doesn't sell, you will still have to pay the auctioneer's costs.

What happens if the buyer backs out?

If the buyer backs out at this point, you will be able to take them to court. The court can make them:

• pay your expenses, and

• pay you the difference if you eventually sell the property for less than the price the buyer originally offered.