Over the last few years a new breed of property auctioneers have entered the market. These auctioneers do not charge the seller a fee to sell their property at auction, instead they charge the buyer. Great news if you are looking to sell your property quickly in auction, or is it?
Having researched this market over the last 12 months I have discovered that while it’s great that you don’t pay any auctioneers fees, you may still find yourself worse off by selling through one of these commission free auctioneers for a number of reasons.
1. This is maybe the biggest problem, the auctioneers will typically charge the buyer a staggering 5% or minimum of £5000 plus VAT!! While you may be thinking that this does not affect you, it does, and here is why.
Any buyer looking to purchase your property at auction will take this figure into account when bidding for your property, so if for example the buyer has a budget of £70,000 to buy your property they will only bid up to £64,000 at auction because they are taking into account the £5000 plus VAT = £6000 fee that they will have to pay the auctioneer.
This means that via a conventional auction they buyer would of paid £70,000 and even after you have paid the auctioneer their fee you would be substantially better off.
2. You may be restricting your potential pool of buyers who normally buy at auction out of sheer principle. Many people who I have spoken to simply refuse to buy anything from these auctioneers because of the 5% buyers fee.
Even if they really want to buy a certain property they have seen in one of these auctions, they will not bid on it purely because of the extortionate buyers fee.
3. Another potential problem that may not seem apparent immediately is the fact that your property will be advertised for a very low guide price (usually to drum up interest) on all of the major portals such and Rightmove, Zoopla etc.
While this is a good tactic to make your property look like a bargain to potential buyers and investors it could have the opposite effect if the property does not sell at auction.
For example, if the market value of your property is £70,000 and the auctioneer sets a guide price of £40,000 to drum up interest and the property does not sell at auction, there will be a footprint left on the property portals which would show that you advertised your property for sale at £40,000 and it didn’t sell.
When you then try to sell your property again via another auction or via an estate agent or privately for close to its market value, you may struggle to convince any potential future buyer to pay any more than £40,000 purely down to the fact that it’s been advertised for £40,000 previously and it didn’t sell.
If you are considering selling your property via any type of property auction because you need a quick sale, my opinion is that you are better off selling your property direct to UK Homebuyers Ltd or a similar company.
UK Homebuyers Ltd guarantee to buy your property & can complete within 7 days if required, no agency fees are payable and UK Homebuyers cover your legal costs.
Call the office anytime on 0800 046 1193 to discuss your situation or contact us here.