When you set out to sell your property, you want to find the right buyer soon after listing it on Rightmove the property market. However, this will not always work for all properties. Some properties will sell faster at the auction than selling through an estate agent. Auction sales tend to have a higher success rate.
But have you stopped to think about the properties that are most suitable for sale at the auction?
What Types of Property are Suitable for Auction?
In the past, auctions were associated with problem properties, development/land opportunities and commercial premises. Other properties that performed well at the auction are churches, garages, pubs, and freeholds.
Even then, the introduction of online auctions opened up the space for all kinds of properties. These online auctions have proven to be among the quickest ways to sell houses at a reasonable price.
If you want to sell your property at the auction, you must be careful to choose the right auction and auction strategy to get the best results.
There are three kinds of properties you can auction. However, the strategy for each is different:
- Normal residential homes
- Problem properties
- Land/development opportunities or commercial premises
Let’s look at each of these categories and what selling them at an auction really entails:
Normal Residential Homes
When considering properties that are best suited for auction, you must also keep the circumstances surrounding the property. Selling property at the auction isn’t just a way to sell property fast; it’s also far more convenient than selling your property on the open market through an estate agent.
Properties sold at the auction usually have a higher success rate translating to greater peace of mind and certainty for you. As such, auction is an excellent option if:
- You have outstanding debts and financial challenges.
- Are going through a separation or divorce.
- Are going through probate or inheriting a property.
- You’re a buy to let investor with difficult tenants.
- Are relocating or emigrating.
Modern Auction – Alternative to Estate Agents
The surge of online auctions that are also referred to as the Modern Method of Auction has made it possible for many people to enjoy benefits like certainty, ease and speed.
Modern auctions are not limited to experienced cash buyers only – they are open to just about any buyer. They’re more mainstream as buyers can purchase through a mortgage hence they have the potential to attain higher prices.
Selling property through the modern auction is an excellent option if you have a reason to sell your property fast but don’t have a development opportunity or problem property.
Problem Properties
Wondering what a problem property is?
Well, these are properties that struggle to find a buyer because of the presence of an unusual or difficult issue. This may be an issue relating to the building or a legal issue relating to it that makes it unmortgageable.
Here are some problem properties that are best suited for sale by auction:
- Japanese knotweed.
- Short leases.
- Non-standard construction like BISF.
- Subsidence or other structural issues.
- Enforcement notices.
- Legal complications.
- Problem tenants.
This list isn’t comprehensive. Other problem properties include the following:
- Properties damaged by floods.
- Property damaged by fire.
- Properties with roof problems.
- Properties with compulsory purchase orders.
- Properties surrounded with heavy development.
- Properties in need of a complete makeover.
Now, that is an exhaustive list and you’re probably wondering why all these categories of property are best for sale by auction.
Challenges of Selling Problem Properties through Estate Agents
It’s important to mention that problem properties aren’t so common. As such, very few estate agents are familiar with how to sell these properties. In fact, some estate agents could even end up discouraging prospective buyers.
Similarly, buyers too may be less experienced in dealing with problem properties. As such, any attempt to sell problem properties through an estate agent will either;
- Take much longer to sell or;
- Sell for a lower price or;
- Have the sale fall through.
A property with a history of multiple failed attempts at selling usually ends up looking very unattractive. The result is a very low price when you finally decide to sell at the auction. For this reason, it’s better to sell your property at the auction than attempting to sell through an estate agent.
Why are Auctions Best for Problem Properties?
Auctions are the best avenue to sell problem properties for the following reasons:
- Buyer experience
Buyers looking to purchase property at the auction usually have more experience in this kind of property. They’ll have a good understanding of the issues with the property and how best to proceed with them. Moreover, most of them will buy property for cash. This eliminates the stress of dealing with unmortgageable property.
- Auctioneer Experience Levels
Auctioneers often have spent much time dealing in problem properties therefore, they’re more experienced in selling yours. This includes finding the right buyers to compete against each other. Remember, more competition between bidders increases the chances of settling for a better price for your property.
- Binding Sale
The good thing about selling problem properties at an auction is the fall through rate is minimal compared to selling through an estate agent. The reason for this is simple; auctions are binding from the beginning to the end. Only less than 1% of auction sales are likely to fall through after the agreement.
How to Sell a Problem Property by Auction
There are two kinds of property auction:
- Modern auction
- Traditional auction
Traditional auction is often the best option when dealing with problem property. Here’s how it works:
- The auction will take place on a set date and will last a few minutes
- The highest bidder wins the house
- Legal exchanges take place immediately with the buyer paying 10% deposit
- The sale will be complete within 28 days.
The traditional auction is different from how you sale property using estate agents. Traditional auctions mean:
No mortgages – Buyers who come to traditional auctions are often cash buyers. The reason is simple; you can arrange for a mortgage in 28 days.
Experienced buyers – Immediate exchange at the auction is a significant commitment. Buyers at the auction are usually ready to invest in complicated properties.
Owing to the fact that buyers at the auction are experienced and ready to buy property for cash, selling your property by auction is a good move. Moreover, problem properties will usually attain sale price through auction than you would selling with an estate agent or a we buy any house firm.
Non-residential Property
Non-residential refers to property you’re selling but isn’t intended for habitation. It’s a good idea to sell such a property at auction to buyers with experience and cash. Most often, such properties will attract developers that are seeking the following kinds of opportunities:
- Homes with room to build new houses.
- Homes that require intensive redevelopment.
- Unique properties like churches, old pubs, nursing homes and police stations.
- Ground rents and freeholds.
- Development or land sites
- Types of commercial properties including offices, leisure, outlets and industrial units
Alternatives to the Auction
If selling your property by auction isn’t a viable option for you but you still need to sell your house fast, then you may want to consider selling to quick house sale companies. These companies will buy your house fast for cash in just a matter of days from the time you contact them. However, you must be willing to sell your house at a discount because these companies will only pay up to 85% of your property’s full market value.
Some of the benefits of selling your house to a quick sale company include:
- No showing – You don’t have to worry about letting strangers walk through your home.
- No repair needed – House buying companies will buy houses in any condition, so you don’t have to worry about spring cleaning or repairs.
- Less stress – Selling your property isn’t a simple task. Selling your house for cash eliminates the stress associated with selling.
- Sell your house fast – By selling your house to a quick house sale company, you have the guarantee of selling your house within the shortest time usually 7 to 28 days.
All you need to do is contact them with details of the property you want to sell. Most companies will usually get back to you with no obligation. If you agree with the quotation then
Lisa’s Final Thoughts
In the past, auctions were mainly limited to the types of property that were considered to be suitable for this mode of sale in the past. Auctions were best suited for selling problem properties and development/commercial properties among others. Even then, this has changed over the years as the modern method of auction has opened the market to other types of property. This is partly because modern auctions allow ordinary mortgage buyers to purchase.
Therefore, irrespective of whether yours is a problem property or a commercial unit or just a normal property, you can consider auction as a mode of sale.
