How Does a Property Auction work? 7 Steps to Auction Success
Posted by Clive Emson Auctioneers on 23rd June 2023 -
Selling at auction has always been popular with homeowners wishing to sell their property as quickly as possible. Auctions offer a high level of certainty that a bid at or above the reserve price will be placed on the day with completion within as little as 20 business days. But how does auctioning a property work? You may have some resistance to selling your property by auction simply because you may be unaware of how a property auction works in comparison to a traditional private treaty sale. In this guide, the property auction specialists at Clive Emson Auctioneers explain the step-by-step process for auctioning land or property so you know exactly what to expect from the moment you decide to auction your asset to the completion date. Essentially, this property boils down to 7 key steps: If you’re looking to speak to an experienced auctioneer about the auction process or to discuss the steps described below, get in touch today. Let us know the details of your property and we’ll talk you through your options. Find out more about selling your property via auction here. An experienced auctioneer provides guidance and advice as you navigate the auction process, and the first step is to decide which auction house you’d like to work with – auctioneers with regularly scheduled auctions, transparent pricing, high-quality marketing information and previous success in selling similar properties are ideal – everything we offer at Clive Emson! See our testimonials here. Next, you work through an appraisal which means an auction valuer assesses the property to discuss whether it is suitable for auction and recommends a guide and reserve price. This may be influenced by a number of factors, such as the local area, the property condition, the potential to add value, the type of property, and other factors. If you are happy to proceed, you sign an auction agency agreement provided by the auctioneer, which outlines the terms and conditions under which the property will be sold, as well as other details such as auction fees. You will be required to provide copies of the relevant ID documentation, such as a passport or driving licence along with evidence of your ownership. The auction house will create draft property particulars, and you can assist with this if there are pieces of information that you think will be important for potential buyers. You can read more about the contents of the property agreement in our guide to selling a house at auction here. Once the agreement is signed, the auctioneer can then act on your behalf to market the property and conduct the auction. At this point, you’ll be expected to instruct a licensed conveyancer or solicitor to assist with legal matters. Conveyancing is the legal process of transferring property ownership from one party to another, and it involves various legal and administrative tasks. Your chosen auctioneer will collaborate with your conveyancing solicitors to request the legal documentation required to sell your property at auction. Working through the formalities is important and ensures any bidder knows that the property legally belongs to the seller and has the appropriate background checks and accompanying paperwork required. At this stage, a legal pack is prepared. An auction legal pack, also known as an auction pack or legal documentation pack, is a collection of important legal documents and information relating to a property being sold at an auction. The purpose of the legal pack is to provide potential bidders with all the relevant information about the property, allowing them to make informed decisions before participating in the auction. The legal pack includes information such as: A conveyancing solicitor will help prepare and review these documents in detail, spot any red flags, and advise you on the implications of the information provided. Before the marketing begins, a reserve and guide price is agreed with the auctioneer, and they then manage bidder pre-registrations, marketing and listing details. Guide prices are an indication of what the auctioneer believes the property may sell for and are often perceived by bidders as the starting price. An attractive guide price can drive interest from buyers, whereas competitive bidding frequently means properties sell at auction for considerably more. The next step is for the auctioneer to market your property – many have established networks of regular investors, auction buyers or developers keen to source properties with good scope to add value, and they will review: A reputable auctioneer is proficient at marketing a property and showcasing all of the features, with auction boards, pre-auction catalogues, website advertising and other methods such as specialist auction newsletters and social media campaigns. In many cases, the level of interest in the property can influence the reserve price, this will be discussed following a consultation with the auctioneer and the feedback they provide. Once the property auctioneer has handled all administrative duties, the property will be scheduled to go to auction on a specific day. Bidders may include owner-occupiers, investors, landlords, local developers or those looking for properties with the potential to add their own stamp or renovate, refurbish and redecorate. They can pre-register and verify their identities for security and due diligence purposes and can request copies of documents and the legal pack in advance, so they already have an idea of what they might wish to offer or their maximum bid. Since the pandemic, the majority of auctions are managed online, although they feature all the essential elements of a conventional auction, with a skilled auctioneer to manage communications between parties. Now for the auction – the exciting part! Bidders can submit bids online, track the current offer price, review whether the latest offer has exceeded the reserve, or even set an upper limit and, enter bids by proxy up to their top value. When the auction closes, the highest bid – if it is at or above the reserve – wins, and the buyer pays their deposit. The down payment is normally 10% of the purchase price but could be a fixed value depending on the type of property and sale value agreed. They usually have 20 working days to remit the remaining balance, at which point the auctioneer will complete the sale. As with any property sale, you will need to continue to work with a solicitor to manage tasks such as recording the change in ownership in the title deeds, and the auctioneer will liaise directly with you and your solicitor or conveyancer and provide the sales memorandum. Once the balance is paid to the auction house, the funds are transferred to you, less any payable fees and commissions, often via a solicitor, and the keys are handed over to the new owner. The auctioneer deals with everything from start to finish, but you can participate in the auction by watching the bidding process online, alleviating your nerves and ensuring you know exactly what is happening and whether your reserve price has been met. If you’re interested in buying a property at auction it’s important that you understand the steps involved. Read our guide on buying land and property at auction here. Read article on Clive Emson website
How do property auctions work for sellers?
Step 1: Find a skilled auctioneer with local knowledge
Step 2: Instruct your auctioneer
Step 3: Instruct a solicitor and progress legal pack
Step 4 – Agree on a guide and reserve price
Step 5 – Marketing the property
Step 6 – Auction day
Step 7: Completing an Auction Property Sale
How do property auctions work for buyers?
Clive Emson Auctioneers
Clive Emson Auctioneers was founded in 1989 to supply a high profile auctioneering facility to corporate and independent estate agents, private clients and statutory bodies. Purchase or Sell land and property with one of the UKs leading property auctioneers.
