Property Auction FAQs
Auction is a good method of sale for unique opportunities in the property market. This includes building plots, amenity land, cottages, farmhouses, farms, farm land and town houses. Properties that are generally in need of improvement or unique one off properties when marketed and priced correctly in the market attract attention and sell very well. Auction offers a great platfrom to achieve the best price for them.
What are the main advantages of selling by auction?
Confidence this year has been high and a shortage of good development properties has seen competitive bidding. Auction may well have achieved a higher sale price from the market as a busy auction room adds to a buyer’s confidence.
Autumn is a clear cut market running usually through September to November. A successful auction sale needs a marketing period of at least 6 to 8 weeks. An auction provides a fixed date everyone (a buyer and seller) can work towards.
For an auction you can send out many sale contracts which are requested by buyers via the legal packs. With private treaty you send one contract out once you go under offer. By Private Treaty you are reliant on that one buyer to get on with legal matters and hopefully exchange contracts. Auction does not leave you with one buyer and one contract. You can have many contracts out there and many buyers completing the legal matters. They are all working towards the fall of the hammer, which is an immediate exchange of contracts with a fixed completion date thereafter. The highest bidder wins and you have an unconditional sale.
By auction, you know you have exposed your property or land to the open market. You have achieved a full open market price after a set marketing period.
You can sell prior to auction if you have an offer you can’t refuse. The buyer can look at the legal pack. Therefore you go straight from being fully available in the market to an exchange of contracts. Other interested parties still have the opportunity of considering the property so you keep all options open until an exchange prior to or as the auction takes place.
What are the main advantages of buying by auction?
- The buyer is buying in the open market at an open price
- The buyer knows where they stand – ie. no blind bidding, opposed to the Sealed Bid procedure
- An exchange of contracts takes place at the fall of the hammer
- A fixed completion time/date
- Upfront, prepared legal pack, so no hidden surprises, the buyer knows what they are buying
Sealed bids: There has been a reported rise in the use of sealed bids by estate agents. Why is this and are they causing more people to consider buying property at auction?
We have seen sealed bids (informal tender) used this year and last year. One farm with development potential we sold had over 15 sealed bids. Some buyers don’t like blind bidding and prefer auction. With competitive bidding auction can build confidence and create a very good result which can exceed a result from sealed bids. Recent auction sales of a property with land and a building plot in a pretty village achieved sale prices above all expectations at 93% and 53% above guides.