Buying/selling a house on auction?

mapcr77

Hi,

I say a house I'm interested in, but it's for sale at auction. Is the 'guide price' similar to the reserve price? I don't know if I should make an offer prior to auction below the guide price, in the hope it will tempt the vendor, or wait till the auction and hope it goes for even less... but then again, it may go for a lot more. Plus there's the auction fees on top. I just cannot get my head around why would anyone want to sell a house at auction? As a vendor, what are the advantages? (I get it for repossessions, but not for your own house?)

Has anyone got any hints and tips?

Thanks!

theGrinch

a guide price may be similar to a reserve but often they are different. A guide price is just that a "guide" and usually an unreliable guide. Think Guide plus 25%-40% on top.

sometimes you can get an offer accepted prior to auction. I have seen it happen, but more often that not it goes to the room. Usually whether you buy pre or post auction, auction room conditions for exchange/completion apply.

vendors may need a quick sale and in an auction room its fairly competitive so the property will hit its fair market value.

remember you will need your finances ready should you be successful. you need to thoroughly inspect the property for any building defects and have your solicitor ready.

my advice is attend a few auctions and check prices against the guide and build up your knowledge.

johnnyredgate

You are unlikely to get an offer below the guide price accepted. If you do make an offer prior to auction that gets accepted you will need to be prepared to exchange extremely quickly, certainly well before the auction date. The advantage of selling through auction for a seller is if it sells there is no messing about or pulling out, at the fall of the hammer you have exchanged and need to pay the 10% deposit, which the seller can keep if you don't complete by the completion date - usually 4 weeks. We sold my father's house through auction after being badly messed around by potential puchasers asking for exclusivity so I lost other buyers interest and then they reduced their offer by 60k, auction was quick and you knew where you stood.
We also bought our home that was entered for auction prior to auction, we offered 15% above the guide price which was refused and 20% above then agreed, had a week to exchange and limited time for completion. If you are intending to offer prior to auction do it as soon as possible, the closer to the auction date the less likely the seller will be to withdraw it from auction in case anything goes wrong with the sale.