How to sell a house through an auction
Auctions are becoming an increasingly popular way of selling houses. If a property is desirable an auction enables a number of potential buyers to see it at the same time, and therefore it can be a means of obtaining the highest possible price for the property.
The advantages of selling through an auction
The advantages of selling by auction include the following:
- You as seller set the date for the auction and this creates a sense of urgency that attracts potential buyers. This also allows you to plan more effectively.
- Prospective buyers do not respond to a price, for they do not know your reserve price; instead, they simply make offers based on what they see. The auction is an environment in which prospective buyers are most likely to go to the top end of the price range that they consider they can afford.
- If your house sells at the auction you can be sure that you obtained the best possible price on that given day.
- You, as the owner, set all the conditions â€“ for example, when you move out of the house.
- You know that the buyer will already have finance arranged.
Do I have to pay a fee for selling through an auction?
Yes, there will be a fee involved in holding an auction, whether the house sells or not. Make sure to check with your real estate agent for details about this.
"Particulars and Conditions of Auction"
Usually a set of Particulars and Conditions of Auction are drawn up for the particular property before the auction. These are usually drafted by the auctioneer, and submitted to you for approval.
In the Particulars and Conditions you should include any special conditions that might attach to the property. For instance, if there was an agreement between you and a neighbour about some particular matter, and the agreement was not registered on the title, then the Particulars and Conditions should mention it.
How is the auction run?
Usually you as seller will set a reserve price for the property. It is usual practice for this not to be disclosed to bidders.
You may be entitled to bid for the property too, but this will be indicated in the Particulars and Conditions.
Once the highest bidder is found, that person becomes the buyer and must sign a contract and pay a deposit (usually 10 percent). If that person is unable to pay the deposit the auctioneer may re-open the bidding, or take the second highest bid so long as it is above the reserve price.
If a house does not sell at the auction there is a strong chance that it will sell shortly after with the bringing back of any conditional buyers â€“ that is, those who could not make an unconditional offer because, for example, they had not yet arranged finance.
- Sellers at an auction are advised to have their lawyer present.