Selling your property at auction can be a great way to dispose of a property that you no longer require or can’t sell on the open market for one reason or another. There are however a number of issues to consider;
- There are up front costs involved when you put a property up for auction such as, auction entry fees c£300-£500, solicitors fees to prepare pre auction contracts and search fees c£500. Sellers would need to commit c£1,000 just to get the property into an auction!
- The timescale from when a vendor instructs the auctioneer until the day of the auction will be anywhere from 4 – 8 weeks. Following this delay, if you are lucky enough to source a buyer in the room it will be another 4 weeks until legal completion takes place. From start to finish the process will take somewhere in the region 3 months, not a quick sale by anyone’s standards!
- There is absolutely no guarantee that the property will sell on the day of the auction. In the event the property doesn’t sell, the vendor would have no choice but to start the process again. It is worth noting that most auctioneers hold auctions every 2-3 months.
- The vast majority of serious purchasers at auctions are investor buyers looking for bargains. Typically, properties that sell in auction sell around 20% below the market value.
Let’s assume a property worth £100,000 sells at auction 20% below the market value;
Open market value = £100,000
Sale at auction, price agreed = £80,000
Auctioneers fees at 2% plus vat = £1,920
Up front entry fee = £300
Up front search fees = £300
Legal fees = £600
Sellers legal fees (most cases) = £600
Timescale = 2-3 months
Total seller receives on completion = c£76,280
In 2013 some 350,000 properties were purchased with cash, equating to 36% of the market in England and Wales, the highest number since 2007. There are a number of specialist cash buying property companies operating in the UK, one of the well recognised names being UK Homebuyers Ltd. There are many benefits to motivated sellers of dealing with a company like UK Homebuyers, some of which are highlighted below;
- Cash buyers offer typically around 80-85% of market value ie c£80,000 – £85,000 for a property worth £100,000
- Some cash buyers will charge fees up front for surveys etc, with UK Homebuyers and a few others, there are no up front fees whatsoever!
- Some cash buyers, UK Homebuyers included, will pay all the legal costs
- Very quick turn around to legal completion, typically 7-28 days!
- Cash buyers like UK Homebuyers will buy any property, regardless of location and condition, this is certainly not the case selling at auction
- With companies like UK Homebuyers you will not have to entertain regular viewing, there are no estate agents involved, no auctioneers to deal with, no fees, no lengthy delays generally meaning, less stress and hassle for the vendor
Total seller receives on completion = c£80,000 – £85,000
When you look at the above figures and timescales and compare selling a property in auction to selling a property directly a specialist cash buyer, it really is a no brainer in many ways. That said, please proceed with extreme caution as there are a number of rogues operating in the cash buying sector of the property market.
There are a handful of firms who have a reputation for reducing the price at the last minute giving the vendor no choice but to proceed in order not to lose their onward purchase / rental property. Carry out due diligence on the cash buyer, use google to search for any complaints made against the company you are considering dealing with, find out if they are approved member of the Property Ombudsman Redress Scheme & if they have professional indemnity insurance. Finally, make sure you meet the person you are dealing with.
In summary, selling a property is without doubt a very stressful event in life. If you feel under any pressure to sign any documents, refuse to do so. Ask plenty of questions, do your own research, take control and it will all run smoothly……….. Good luck.