Why People Sell Property Via Auctions
There are various potential reasons for a property being sold via the auction method rather than through an estate agency.
So what are the benefits of selling at auction that persuade people to use this method?
Firstly, there is the idea of speed: it can be a good way of selling a property swiftly. Because the auction takes place on a set date, there is a timescale imposed by an auction where none exists with a standard property sale. As a potential purchaser, you know you have to research a property, look around it and so forth all before a given date when you will get a single chance to bid for it and attempt to buy it. Likewise as the vendor, there is a set date where your property may well sell, rather than potentially being on the market for months and months with no bites via the traditional sales route. It is often said the main reason why people decide to sell via an auction is because they want to sell quickly - for instance it could be a repossessed home where a quick sale is desirable because the money is urgently needed to repay a debt.
You can also get a good price for it if there is multiple interest, due to the competition: people bidding against each other get competitive and want to win, and we all know at auctions where two or more parties really want something, prices can escalate quickly. So there is a chance of getting a great price when selling at auction.
There is also some protection for you because of the reserve price as the seller, so there is no chance of your property selling for just a pound. Also as the seller, once it is sold, it's sold: there is no pulling out of the deal a month down the line or a chain leading to problems: once the hammer goes down that's final and the person who buys has to pay 10% straightaway and the rest within 28 days, so the whole process can be quick.
Properties that come up at auction are often, but not always, ones that will require quite a lot of work doing to them, which is why it is essential to research so carefully before going and making an offer. Some auction properties will have been offered for sale first via the traditional estate agency route, and not sold, which is why the vendor is trying an auction instead. Given this you should always approach an auction property with an enquiring mind and a critical eye, do your research, look around, and get a survey done before you even think about putting in a bid and setting a value on what you are prepared to pay for the property. Remember that properties in bad condition that require a lot of work may not be attractive to many, but they could be attractive to builders and developers, which is why these often end up as auction properties.
Never get too attached to an auction property as the chances are that you will not become the owner after the auction is done, and getting too attached can cloud your judgement when it comes to bidding!Last update: 07 May 2015
More first-time house buying articles:
- How Many Houses Should I View?
- Rejected Mortgage Application
- What to do during a Bidding War
- Finding Property at a House Auction
- Condition Report Explained: First-Time Buyers