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Selling at auction

Advantages and disadvantages

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Below are some of the main advantages and disadvantages of selling your home via an auction. If you have some pros and cons that have not been mentioned here, please e-mail them to us.

There are certain types of property that are particularly well suited to being in sold through an auction. The best and most common types of property include:

  • Repossessed homes that require a quick sale to meet the former owner's debts.
  • Unique or individual properties that are difficult to value and may not fetch their true worth if sold through more traditional routes.
  • Properties that are hugely in demand.
  • Any property for which it would be hard to find a buyer through the normal route. This can include properties that are in poor condition, and those that require substantial repair or renovation. These properties may only be suitable for sale to an investor with the necessary funds to refurbish the property.

One of the biggest advantages of a property auction is the potential for a bidding war. If two or more parties decide that they are desperately keen to buy a particular property, they may get caught up in a spiralling price war, that could see the property achieve a much higher than expected value.

The auction process is a lot quicker than the normal sale process. The bulk of the work is carried out before the auction and once you leave, the sale is virtually complete. Exchange of contracts happens before you leave the auction and completion will take place within 28 days.

The first disadvantage of an auction is that it results in a greater invasion of your privacy during the pre auction phase. You are obliged to let all interested parties view your home and must also make the property accessible to surveyors who wish to value it for their clients. You may therefore find that your house is overrun with people in the weeks leading up to the auction.

An auction is a much more volatile marketplace in which to sell a property. The market value is decided on the spot and you may not even be able to find a buyer at all. It is quite possible that you could achieve a far lower price than anticipated, though the risk of financial ruin is negated by the seller's ability to set a reserve price. It is inadvisable to commit yourself to buying a property elsewhere if you are relying on the proceeds of an auction sale, as you can never be sure just how much you will make.

Selling at auction is not the cheapest way to sell your house. It is more expensive than many estate agents and there are certain fixed costs involved, regardless of whether you manage to sell it.

Your solicitor must be present at the auction in order to answer any last minute questions about the property and to conduct the signing of contracts. This may be inconvenient and expensive, as you will have to pay the solicitor for the additional time that they spend at the auction, as well as for any transport costs that they incur. (Don't anticipate that they will travel economy!)

Finally, though some people would see this as an advantage, you must be ready to get out of the house within 28 days of the auction. This is a short timescale, so you need to have your life pretty much in order before the auction.

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