Homes Under The Hammer is one of the BBC’s most popular daytime TV shows and illustrates how easy it is for buyers to pick up a house at a good price; particularly buy-to-let investors and amateur property developers.
The show features homes that are sold at auction which is not the typical way that many people choose to sell their property. So, why do people do it and what are the benefits? We’ve put together a brief summary of the pros and cons so you can make up your own mind.
Reasons Why People Sell Property at Auction
Offering a fast way to market and an almost guaranteed selling position where the buyer can’t back out, auctions are a popular way to sell a home when time is of the essence.
Once the hammer falls at auction then the buyer must put down an unreturnable 10% deposit and they only have four weeks in which to complete the sale and pay the remaining 90%.
Auctions have traditionally been the method used by mortgage companies to realise the capital tied up in an asset against which their customers have defaulted (repossessed properties) or in cases of Probate when liquidating a deceased’s estate.
It is also common for owners of run-down or unusual properties to turn to an auction house as conventional marketing may not be reaching the right audiences.
As can be seen from Homes Under The Hammer, auctions are generally attended by buyers looking for a project or homes that may be offered at lower than the market value. This can be the case with homes that have been repossessed and where the mortgage company is only looking to achieve a value which clears any outstanding debt.
Despite this common perception that homes sold at auction only ever achieve less than the market value, the opposite can also be true.
With the right property, demand from several buyers can drive a price up beyond the market value and help sellers achieve a very competitive sale.
At the end of the day, auctions tend to be the best choice for people who need to sell up within a specific time frame. If your property is priced realistically and there is enough interest on the day then you should get a sale and a completed set of contracts within a month.
How Much Does Selling At Auction Cost?
It is important to remember that, although you don’t have to pay estate agent’s fees when you use an auctioneer to sell your home, you do have to pay a fee to the auction house.
This varies by auctioneer and may be in addition to advertising costs depending on the kind of property you are selling. Prestige homes may well be included in exclusive marketing literature that is distributed to interested parties. This is usually a fixed fee for entry in the catalogue and should be detailed separately to the seller’s fee. These fees are payable upfront and are charged irrespective of whether your home sells.
The seller’s fee can either be a percentage of the value achieved at auction or may be a fixed fee. Again, this varies by auction house but is typically around 2-3% of the price you get for your home when it is sold.
In addition, you may have to pay an additional set of fees for preparing the legal paperwork prior to the property being listed in the auction catalogue. This is generally around £200-£500. This is usually an up-front cost.
Some auction houses work in a slightly different way (see Online Property Auctions, below) in that the seller does not pay any fees at all. Instead, it is the buyer who pays the commission fee and there are no upfront costs for marketing and advertising.
Setting a Reserve Price
The reserve price is the lowest price that you will accept for the sale of your property and is set in advance of an auction, being agreed with your auctioneer. It is not made public information but if the bids on the day do not exceed the reserve price then your property will go unsold and be withdrawn from sale.
If the bids meet, or exceed, the reserve price then the auctioneer will sell your property at that price and you will be unable to withdraw your property after the hammer has fallen.
You should always make sure that your reserve price is realistic in order to give your home the best chance of selling. It should not be too low that you have any regrets about the value and it should not be too high that it restricts the chances of it selling.
It is important that you seek advice before setting your reserve price, particularly if your home has already been on the traditional market and failed to sell It may be that you need to lower your expectations.
Setting a Guide Price
A guide price is different from the reserve price and is an unofficial range in which the value of a property is placed in order to give buyers an indication of what to pay. The guide price may not be met or can be vastly exceeded depending on who is at the auction on the day of the sale.
It is not a fixed price that must be met and can even be much lower than your reserve price in order to tempt buyers in to start the bidding off.
Selling Property at Auction
The auction house that you choose to sell your property should be doing the majority of the work in order to advertise and promote your home for sale. However, you should make sure that you work with the auctioneer and agents to give your property the best chance of selling for its maximum value.
It is usual for the auction house and agent to arrange a day when viewings can be undertaken so make sure that you spend time preparing your home to look its best for potential buyers.
Before the day of the sale, you should also be doing all you can to spread news of the auction across your own social media channels as well as those of the agent. Send links to family, friends and colleagues to the auction catalogue listing and ask them to share these widely.
Once the auctioneers has accepted the final bid on your property (providing it has met its reserve price) then your buyers will pay a non-refundable 10% deposit to secure the deal.
All you need to do is make sure that your solicitors are ready to handle the paperwork from the auction house and get ready to complete the contracts within 28 (or 56 with an online property auction) days.
Online Property Auctions
In recent years, an alternative to the traditional auction house has become popular; the online property auction or ‘modern method of auction’.
Some estate agents, including Property Assistant, can offer this kind of digital auction which follows a similar method to that detailed above but follows a format that may be familiar to us when using sites like eBay.
A specialist property auction service, the timescales are slightly longer for the bidding process and they take place online. Like with a traditional auction house, buyers must pay a reservation fee when the auction ends which secures the property. However, the completion process can take up to 56 days instead of 28.
Property Assistant and Selling Your Home at Auction
Property Assistant is pleased to be able to offer the service of selling your property at auction via our partnership with Pattinsons. Another family run business with over 20 years of experience at auctioneering, this online property auction allows you to sell your home for free.
You can find further details of how this process works via our website or discuss this in detail by calling is on 0118 912 2370.
There’s a beautiful quote by a famous Japanese writer that states ‘Individually, we are one drop. Together, we are an ocean.’ It aptly demonstrates the sentiment behind our recent series of Friday blog posts that highlights the importance to us of the team we have gathered.
The success of Property Assistant over the last (almost) five years is due to the people that power its services and this week we’d like to celebrate a very important person in that team.
Julie Lawry, Co-Owner of Property Assistant
Co-founded by Julie and her husband, Daniel, family has always been at the heart of Property Assistant’s ethos. What that means to us is creating and fostering a sense of loyalty, trust and support for the people that we work with and for; it’s what drives the day-to-day business and provides the motivation for our success. Julie’s commitment to this drive is a real pleasure to work around and we know that our clients feel valued because of her care and commitment. She is immensely generous with her time and she dedicates an enormous amount of personal energy to solving problems for clients; it’s one of her best qualities.
She is an energetic and bubbly person who has a true love for the job she does and gets a real kick out of those moments when she and the business satisfy another client.
Julie’s background is in management and research within the food and pharmaceutical industry. She has worked as a section manager for the Microbiology department of Waitrose and as a Research Assistant for the global biotech company, Syngenta. Until setting up Property Assistant in 2014, she was a Test Centre Manager with the Driver and Vehicles Standard Agency.
She brings much needed organisation skills to the team and she is particularly effective at managing our lettings business; communicating with landlords, tenants and the various services that are needed to deliver our managed rental properties.
One of Julie’s best qualities is her modesty and she is unassuming about the importance of her role….it may be why has taken over two months to get her to sit down and answer our questions. Daniel was finally able to pin her down so we could give her the credit she thoroughly deserves….
Tell us about what your job entails.
General Sales and Lettings administration, helping develop and grow the business through networking and generally keeping Daniel and Daryl in order and I sometimes make the tea!
What did you do yesterday?
Attended a photoshoot of our latest sales listing with our professional photographer, liaised with our Landlords and Tenants on our latest tenancies that have started to make sure all are settled in, met with a fellow business owner about networking opportunities, attended a rental appraisal with Daniel, carried out a quarterly inspection of a rental property, interspersed with calls, admin and emails.
What’s the most challenging part of your job?
Managing Tenants expectations of general maintenance repairs and not letting my son and husband delegate further work on me.
What kind of challenges do you face on a day-to-day basis?
Finding new clients to help with their property requirements.
What’s it like to work for Property Assistant?
Hard work, yet enjoyable and very satisfying, especially pleasing when we create solutions to our client’s property problems.
If you weren’t working in your current job, what would be your dream career?
Mystery shopper for the hotel industry or wine taster 🙂
What would be your ideal home and where would this be?
We moved into our dream home in March this year and are enjoying making it our own. It could only be improved upon if I was able to pick it up and move it close to Wokingham town centre.
If you won the lottery jackpot, after a house, what would be your first big purchase?
A long holiday, somewhere hot.
What’s your guilty pleasure in life?
Nirvana Spa, I couldn’t be without my membership
What do you do to unwind after a stressful day?
Cuddling up on the sofa in front of the log burner watching a juicy crime drama with my husband Daniel.
What five words would your best friend use to describe you?
I actually asked him about this and this is what he said…”Organised, caring, loyal, kind and thoughtful”.
What kind of a child do you think you were in school?
The chatty, giggly one
What is the most important thing in life to you?
That’s an easy one – Family – (husband Daniel, children Daryl & Jenna, their respective partners Ritchard and Sarah, our 4 grandchildren, Riley, Evie, Michael and Freddie and father in law Peter) I would like to add a disclaimer to say this list is not necessarily in order of preference! 😂
Where do you see yourself in ten years’ time?
Retired on a sandy beach somewhere with a glass of wine or a cocktail in hand.
Congratulations! You’ve accepted an offer on your home and are looking forward to starting the next chapter of your life in a new property. The process of exchanging and completing contracts can take anything from just four weeks to several months and to make sure there are no complications, there are several things that you need to bear in mind to prevent any problems down the road.
The process of selling your home involves the smooth exchange of paperwork from several organisations with the most important of these often being the mortgage lender. Although this is often straightforward enough, you do need to be aware of how certain decisions could affect your mortgage offer.
Don’t Make Any Large Purchases
Your mortgage offer is usually calculated on your financial status when you first applied for it. This means that making any large purchases could affect how you are viewed as a debt liability. Even if you make a cash purchase, this may be seen as a negative when looking at your verified available funds. And, certainly, if you take out an additional loan this could have a negative impact on your loan approval.
Defer any big purchases until after the contracts on the sale of your home have been completed.
Don’t Switch Banks
Us Brits tend to be pretty loyal with the financial institutions we choose to look after out money but poor service or the temptation of better deals can motivate us to switch banks. Whilst this can be a great idea to make some savings on your current and/or savings accounts, it is best not to do this whilst you are in the middle of exchanging contracts.
The reason for this is similar to the last in that your mortgage lender will have verified your loan based on your status at your existing banks and by checking funds in your accounts. However, should anything go wrong with your current mortgage offer and you need to renegotiate a deal with a new lender then a change in bank accounts can seriously affect your credit score.
As with our previous advice, just defer making a decision like this until after your contracts have been completed.
Don’t Pay Off Existing Loans
There’s a theme developing here….
Paying off loans can sound like a good idea and, in general, there are no issues with you doing this when it comes to a mortgage offer. However, you should check with your lender before you pay off any credit accounts. Some mortgage lenders prioritise your debts in different ways and your loan may even be subject to certain debts being settled before they release your mortgage funds.
Don’t Change Job
Just like all of our other pieces of advice here, changing your job can seriously impact your credit rating and may put your mortgage offer at risk. Whilst, in some cases, this may not be in your power to control, you should again defer making a decision of this kind, if you can help it, until after your contracts have been completed.
Don’t Make Changes to the House
Again, this advice should be pretty obvious but it is worth pointing out that the contracts for sale are drawn up on the basis of ‘Sold as Seen’. In this respect, it is not in your best interests to start making material changes to the property, even if the exchange process is taking a while.
Whilst it would be unlikely that many people would start any drastic new projects such as redecorating or converting a loft, it also applies to deconstruction jobs. For instance, if you accepted an offer on the sale of your home complete with outbuildings and some lovely apple trees then removing these may have an impact on the offer you received. Of course, you need to deal with maintenance issues but if there is to be any large change to the house and garden from when your buyers viewed the property then you should avoid doing so. Maybe talk to your estate agent and get some feedback from your buyers before proceeding? Additionally, if there are any large changes then the details should be included in the Sale Particulars that have been drawn up by your solicitors.
Don’t Change Your Marital Status
This shouldn’t be an issue for many people but it is important to be aware of if you are planning a wedding or going through a divorce. How you hold title for a property is affected by your marital status and this needs to be taken into account by the solicitors who are drawing up the contracts.
Don’t Count Your Chickens
And finally, though every effort is usually made by all parties in a chain to complete the sale of a property without delay, sometimes things don’t go to plan. Further up or down the chain, a mortgage offer could go awry or a survey could reveal issues with a house that forces a rethink and even a change of circumstance with a buyer or vendor.
Until the contracts have been exchanged, it is worth not committing anything to the move other than planning. Of course, there are circumstances when exchange and completion are just a few weeks (or even days) apart and you will need to have booked the removal company and made other arrangements.
Here at Property Assistant we have years of experience in helping our clients successfully secure a sale for their properties. On top of this, we provide post-sale support services that are second-to-none. We know that the process of selling your home and moving house can be confusing for some people so we do our best to demystify the whole kit and caboodle. So, if you are thinking of selling your home and want to partner with an estate agent who can hold your hand the whole way through then give Property Assistant a call today on 0118 912 2370.