Property auctions have moved from a niche corner of the market into the mainstream, helped along by television and the promise of a fast, no-nonsense sale. For the right property and the right seller, auction can be an excellent route. For others, it brings costs and uncertainty that are easy to underestimate. Here is a straight guide to how it works, and whether it is right for you.
How selling at auction works
You instruct an auction house and agree a reserve price (the minimum you will accept) and a guide price (an indication to attract bidders). Your property is marketed in the run-up to the sale. On auction day, if bidding reaches your reserve, the fall of the hammer forms a legally binding contract — the buyer pays a deposit on the spot and must complete, traditionally within 28 days.
Traditional auction versus the modern method
In a traditional auction, contracts exchange immediately and completion follows in around four weeks. The modern method of auction gives the winning bidder a longer reservation period (often 28 days to exchange and a further 28 to complete), which suits buyers who need a mortgage. The trade-off is that the modern method usually relies on the buyer paying a non-refundable reservation fee, and it is a little less certain than a traditional exchange on the day.
The advantages
- Speed and a fixed timeline. You know the sale date in advance, and a traditional auction completes in weeks, not months.
- Certainty once the hammer falls. The sale is legally binding, so there is far less risk of a buyer pulling out.
- Competition can drive the price up, particularly for unusual, tenanted or run-down properties that excite investors.
- No chain, as auction buyers are typically ready to proceed.
The things to weigh up
- Fees. Auction houses charge commission, and there are marketing and legal-pack costs, some payable upfront whether or not the property sells.
- No guarantee of a sale. If bidding does not reach your reserve, the property does not sell — and you may still be out of pocket for the costs.
- Prices can disappoint. Auctions attract buyers hunting for a bargain, so a property can sell for less than you hoped on the open market.
- You must be ready. A full legal pack has to be prepared before the sale, which takes time and organisation.
Is auction right for you?
Auction tends to suit properties that are hard to value or hard to mortgage — tenanted homes, probate sales, properties needing work, or unusual plots — and sellers who want a fixed timescale. If your home is a standard, mortgageable property in good order, the open market may well achieve more.
A simpler alternative: a direct cash sale
If what you really want from auction is speed and certainty without the fees and the risk of no sale, selling directly to a cash buyer can give you both. There is no reserve to miss, no upfront cost, no waiting for an auction date, and the price is agreed before you commit. At Any Property Wanted we buy across the West Midlands with our own funds, make a fair cash offer within 72 hours, cover the legal fees, and let you choose the completion date. We are a member of The Property Ombudsman and registered with the ICO.
Not sure which route suits your property? Call us free on 0800 634 7059 for honest, no-pressure advice.