Selling Property Through a Traditional Auction: Benefits, Challenges & Expert Tips

Selling your property through a traditional auction can be an effective and speedy way to achieve a legally binding sale. However, as with any method of selling, there are both benefits and challenges to consider. Here, The Auction Experts team investigates the pros and cons of this process, helping UK homeowners decide if it’s the right option for them.

Pros of Selling Through a Traditional Auction

1. Speed of Sale
   One of the most significant benefits of selling your property through a traditional auction is the fast sales process. Once the hammer falls, contracts are exchanged immediately, and the buyer typically completes the purchase within 28 days. This rapid timeline is great for sellers seeking a quick transaction.
2. High Certainty and Reduced Fall-Through Rates
   Selling your property through a traditional auction offers a high level of certainty, with fall-through rates of less than 1%. The immediate exchange of contracts makes the sale legally binding, minimising the risk of the buyer withdrawing.
3. Chain-Free Transactions
   Auctions typically involve chain-free buyers, reducing potential delays and complications associated with property chains. This simplicity can lead to a smoother and more predictable selling experience.
4. Competitive Bidding Environment
   The auction setting can create a sense of urgency among buyers, potentially driving up the final sale price through competitive bidding. This environment can be particularly beneficial if multiple bidders are interested in your property.
5. Transparency
   The auction process is transparent, with all bids made publicly. This openness ensures that you can see exactly what buyers are willing to pay, providing clarity and confidence in the sale process.

Cons of Selling Through a Traditional Auction

1. Uncertain Final Sale Price
   While selling your property through a traditional auction can lead to competitive bidding, there’s no guarantee that the final sale price will meet your expectations. If bidding is less enthusiastic than anticipated, you might have to accept a lower price than desired unless you have set a reserve price.
2. Upfront Costs
   Selling at auction involves upfront expenses, including entry fees (typically between £500-£1,000) and solicitor fees for preparing a legal pack, which can range from £1,500 to £2,000. These costs are incurred regardless of whether the property sells.
3. Limited Buyer Pool
   Traditional auctions often attract cash buyers or investors, which may limit the pool of potential purchasers. This can be a disadvantage if your property appeals to a wider audience, including those requiring a mortgage to finance the purchase.
4. Marketing Period
   The time between listing your property for auction and the auction date can be several weeks. During this period, you’ll need to keep the property in presentable condition for viewings, which can be inconvenient.
5. No Guarantee of Sale
   There’s no assurance that your property will sell at auction. If bidding doesn’t reach the reserve price, the property remains unsold, and you’ll need to explore alternative selling methods.

For sellers who want the benefits of an auction but with more flexibility, the modern method of auction is worth exploring. Unlike traditional auctions, this method allows buyers to secure the property with a reservation fee and provides a longer completion timeframe, typically 56 days. This gives buyers the chance to arrange financing, opening the door to a broader audience, including those who rely on mortgages. Learn more about this alternative by reading our detailed guide: Understanding the Modern Method of Auction.

Tips for Sellers Considering Auction

• Set a Realistic Reserve Price: Work with The Auction Experts to set a reserve price that reflects the property's market value to encourage bidding while ensuring you achieve an acceptable sale price.
• Prepare a Comprehensive Legal Pack: Providing potential buyers with detailed legal documentation can instil confidence and help ensure a smoother transaction.
• Choose the Right Auction Company: Select an auction expert with experience in selling properties similar to yours and a strong marketing strategy to reach the right audience.

What Next?

Selling your property through a traditional auction offers both benefits and challenges. It’s crucial to assess your circumstances, financial considerations, and the property’s condition to determine if this method suits your needs.

Consulting with professionals, such as The Auction Experts, can provide personalised guidance to help you navigate the auction process effectively.

Considering selling your property through a traditional auction?

Contact The Auction Experts on 0330 179 8180 or email hello@theauctionexperts.co.uk for advice or to arrange a valuation. Our team can guide you every step of the way.

In the meantime, we’ve answered some of your common questions about traditional auctions.

Frequently Asked Questions About Traditional Auctions

What is a traditional property auction?

A traditional property auction is a public sale where properties are sold to the highest bidder. Contracts are exchanged immediately at the end of the auction, making the sale legally binding.

How long does it take to sell a property at auction?

The entire process, from listing to completion, typically takes around 6 to 8 weeks. This includes a marketing period before the auction and a 28-day completion period after the auction.

Can I set a minimum price for my property at auction?

Yes, you can set a reserve price, which is the minimum amount you're willing to accept. If bidding doesn’t reach this price, the property won’t be sold.

What happens if my property doesn’t sell at auction?

If your property doesn’t sell, you can consider re-entering it into another auction or explore alternative selling methods, such as private treaty through an estate agent.

Are auctions suitable for all types of properties?

While auctions can be suitable for various properties, they are particularly beneficial for unique, distressed, or investment properties. It’s essential to assess whether your property’s characteristics align with typical auction trends.