There are many benefits to selling a property at auction – all the potential buyers are in one place, they all tend to be cash buyers, and if a property is sold then exchange is immediate.
But what happens if a property doesn’t sell? The simple answer is that it will be withdrawn from sale, but there is more to it than that. Read on for our easy guide on how to sell property at auction, and what to do if it doesn’t sell.
The auction guide price
Before a property goes to auction, a guide price will be set. This is essentially a marketing tool which gives potential buyers an indication as to what the property is worth. It is not an asking price and there is no guarantee the property will go for that amount. It may not be a single figure – the seller can give a price range.
It might be tempting to go high with the guide price but sellers are better served by being realistic. It is certainly worth getting this right, because this is one of only a few pieces of information would-be buyers have about the property’s future prospects.
The reserve price
A reserve price is the lowest price a seller will accept. This is a confidential figure set between the seller and the auctioneer. Potential buyers will not know what the reserve is but, again, it is worth considering carefully, because the auctioneer will use it to start generating interest ahead of the auction.
For properties with a single figure guide price, the reserve cannot be more than 10% over that figure, and for a property with a guide price range, the reserve must sit within that range and not exceed the top figure.
The Legal Pack
Before an auction, potential buyers receive a set of documents about each property, known as a Legal Pack. An up-to-date Legal Pack is considered essential for generating interest and securing a sale.
In some circumstances, a thorough and detailed Legal Pack can even help secure a bid before the auction. If a would-be buyer is interested in a property then they may contact the auction house to make an offer ahead of time. Providing this offer is strong enough for the seller to accept, purchase and even exchange can be agreed well ahead of the auction day.
What happens if a property doesn’t meet its reserve price?
If a property doesn’t meet its reserve price, this indicates that there wasn’t significant interest, which may be because the reserve was too high.
However if any potential buyers have indicated an interest in the property, then there is the possibility of securing a post-auction bid. This is when the auctioneer invites interested parties to ask further questions, giving them another opportunity to make an offer.
What if there is no post-auction bid?
If no sale is secured then the property will be withdrawn and listed as unsold. What’s more, the reserve price can be revealed, leaving sellers with little room for negotiation in the future.
If you are considering selling your house at auction, let us help you. Even if you’ve been unsuccessful previously, we’d be pleased to work with you to turn your auction woes around. Find out more about our auction services, and get in touch with any queries.