The early part of 2021 is looking like it’s going to be a busy time for the property market in London.
Buyers across the capital are looking to complete purchases before the stamp duty deadline at the end of March – around 12 weeks from now.
With that timeframe ticking along, many buyers are opting for auctions to speed up the process.
So, if you’re looking to sell quickly, an auction could be a great option for you.
Sell your house quickly at auction
According to Rightmove’s December 2020 House Price Index, around 650,000 property transactions are currently going through – with many of those in London.
That’s putting increased pressure on lenders, conveyancers and local authority searches as buyers scramble to beat the stamp duty deadline.
By selling at auction, however, it’s possible to reduce the amount of time it takes to complete your sale.
How do house auctions work?
Auction houses will publish a catalogue of properties, known as ‘lots’, that are coming up for sale a few weeks in advance.
That gives potential buyers the opportunity to scrutinise properties they’re interested in.
If you’re thinking of selling your home at an auction, here’s the process you can expect:
1. Find an auction house
You should always ‘shop around’ for a good estate agent to sell your home and auction houses should be no different.
Speak to family and friends for recommendations and look online for reviews of local auction houses.
Then, get in touch with several to find out more about them, how they’ll market and sell your property and what they charge.
2. Set your guide price
Once you’ve found an auction house, you’ll need to set your property’s guide price.
The guide price is what’s displayed in the auction catalogue and on marketing material and is what you, and your auction house, think your property is worth.
When setting your guide price, seek advice from your auctioneer. While you’ll want to achieve the best possible sale price for your property, you’ll also need to set the guide figure at an amount that will generate plenty of interest.
3. Set your reserve price
The reserve price on your property is the minimum amount you’re willing to sell it for.
This figure isn’t made public and remains between you and your auctioneer, but if bids fall short of this figure, your property will remain unsold.
4. Instruct your solicitor
You’ll need to appoint a conveyancer or solicitor to undertake searches and compile a legal pack, which will be available for buyers to view prior to the auction.
Your auction house may also need your solicitor to be available to answer enquires from potential bidders.
5. Marketing your property
As well as the auction catalogue, your auctioneer should also market your home on the main property portals, like Rightmove, Zoopla and OnTheMarket, as well as on their own website.
Interested buyers will then have the option to view your property ahead of the auction.
6. Methods of auction
The Traditional Method of Auction means you exchange contracts with a buyer as soon as their bid is accepted and meets your reserve price.
The buyer pays a 10% deposit immediately and then has 28 days to complete their purchase of your property.
Under the Modern Method of Auction, the buyer pays a non-refundable reservation fee on your property once their bid is successful and then has 56 days to exchange contracts and complete the purchase.
Both methods of auction are considerably quicker than most sales on the open market and those set timeframes could help you when it comes to beating the stamp duty deadline.
What is a conditional auction?
A conditional auction is another name for the Modern Method of Auction, which usually takes place online.
Under a conditional auction, the buyer pays a reservation fee to secure the property once their bid has been successful.
They then have a period of time, usually 56 days, to complete when compared with the Traditional Method or ‘unconditional’ auction process.
This extended period means buyers can secure finance and do more due diligence.
Selling your house at auction: How much does it cost?
Auction houses, like estate agents, charge a commission fee to sell each property that goes under the hammer.
Auction houses charge a commission fee, which is only payable when your property sells.
You could also have to pay an ‘entry fee’ with your auction house, which covers marketing costs, while an Auction Pack Fee is payable on completion when selling through the Modern Method of Auction with Ellis & Co.
With the property market remaining buoyant despite the pandemic there are many reasons why now could be a great time to buy in London.
And if you are thinking of buying in 2021, you could be considering a new-build home. Our guide tells you everything you need to know about new-builds versus old builds.