Property Auction: How Auctions Work
Property auctions over the past 2 years have become more and more popular with sellers. This increase in the popularity of property auctions is being driven by the benefits auctions offer to sellers, especially in the current market with a lack of housing stock. However, modern property auctions also offer a range of benefits to potential buyers. We’ve gone over what these benefits are for both buyers and sellers as well as why you might consider an auction for your own property.
How auctions work
Modern property auctions are simple and only have two main steps. First, an estate agent will create interest in the property. This will be done by conducting viewings, photos and videos to market the property, and generally encouraging buyers to make an offer. The second step involves the auction itself where buyers are encouraged to bid competitively on the property before the ‘soft end date’ of the auction.
Benefits for sellers
For modern property auctions, the steps a seller has to take are very simple. All the seller has to do is set a minimum reserve price and decide the end date of the auction. This end date will usually be between 28 and 56 days after the auction has started depending on the value of the property. From here potential buyers place bids on the property until the auction ends. Unlike normal property sales where buyers will try to chip away at the asking price, the price at auction can only rise. Due to this, sales through auctions are also more likely to go through as the bidder has a financial commitment to the auction. Furthermore, if there is a bidding frenzy just before the auction closes then it can be automatically extended. This ‘soft end date’ helps ensure that the seller receives the highest possible price.
Benefits for buyers
There are also many benefits for buyers when it comes to property auctions. The first of these benefits being increased transparency. All potential buyers will have access to a Home Information Pack before viewing the property. Once bidding starts potential buyers can place bids 24/7 online meaning buyers can still participate even if their own schedule is inflexible. There is also more security for buyers as once a bid has been successful before they enter into a reservation agreement, greatly decreasing the chances of the deal falling through. This even applies to non-cash buyers so you can participate in auctions even if you purchase the property with a mortgage. The final benefit of auctions is that they move faster than standard property sales. Auctions attract motivated sellers looking for a swift transaction meaning its rare that a deal will be affected by delays.
If you are looking to sell your property and want to know if an auction is right for you get in touch with us here.
