The Costs Of Selling Rental Property At Auction
When you’re ready to sell your house or flat, auctioning can sometimes be an attractive prospect.
It gives homeowners the chance to have a fixed date for knowing when their property will sell, which can be crucial if certainty about selling is your biggest priority. It also has the potential for a home with a lot of buyer interest to generate competitive bidding that can drive the final sale price far beyond whatever minimum reserve price you might set. For that reason, proceeding with an auction could, if successful, be a good choice.
But selling your property at auction also comes with a number of potential drawbacks, not least being the fact that competitive bidding isn’t guaranteed, and if your home generates little buyer interest then you will have to accept a sale price potentially lower than you’d like or indeed it may not even reach the reserce price and therfore not sell.
And auctioning also comes with certain costs that you’ll have to pay, including fees for the company that handles the actual sale of the house or flat. Before deciding on whether to auction your home, it’s important to learn more about the various charges that come with it.
How much does it cost to auction a home?
Much like paying fees when selling your property through an estate agent who’ll list, market, and perform viewings, you’ll also have to pay costs when auctioning your property, in addition to other expenses such as having a solicitor prepare the necessary legal paperwork.
The costs break down typically into three significant components, covering all parts of the auctioning process from the initial listing through to the final sale.
Legal pack – When you are listing a house for auction, you’ll need to contact a solicitor and pay them to prepare a legal pack detailing important information about the property. The standard charge for this is at least £200, and will have to be paid before the auction.
Auction entry fee – This is the fee that auctioneers typically charge for entering your property into their auction catalogue, and will cost you roughly £200 (possible more) plus VAT. You might be able to delay having to pay this cost until the sale is complete.
Auctioneer’s commission – The auctioneer who successfully sells your property will typically charge about 2 percent of the final price it sells at, plus VAT. You’re liable for this fee after your home sells.
Is there any way to reduce the costs of auctioning my home?
Yes, there are a couple of ways that you might be able to reduce or completely eliminate some of the costs associated with auctioning your house or flat.
One option is to pass the full costs of the auction on to the buyer. This is relatively simple because as the seller you can specify the terms of the sale contract, and you could add a provision that says the winning bidder will have to pay all costs of the auction process. The potential buyers will be aware of all terms of the contract before they place bids.
Another way to reduce costs is to negotiate with the auctioneer to see if they will reduce the typical two percent plus VAT commission that they will charge. However, there is no guarantee that the auctioneer will agree to this, and they are under no obligation to do so.
Should I auction my house or sell another way?
If you’re willing to pay whatever the fees are associated with auctioning and your preference is to auction because of wanting a guaranteed sale date or other reason, you could auction your property.
Alternatively, you might want to discuss a sale with an estate agent who might be able to generate more interest in your property through their marketing efforts. But you’ll still have to pay them fees, so if you’re trying to keep costs down this isn’t the best option.
A third choice is to work directly with a property buying company who’ll offer you a quick and typically competitive offer for buying your house or flat, without charging any fees. LDN Properties, which has been in business since 2003 can help you sell your house fast and avoid paying any fees. It’s a great option if you’re looking for a zero-cost but speedy sale.
Whichever route you take for selling your house, educate yourself on the costs (or lack of costs) involved so that you can make the decision that’s best for your individual situation.