Selling a House by Auction - has anyone here done it?

youth_leader

I'm in the NE and sold at my EA's traditional auction.  I was trying to sell a listed building that needed a lot of work, and after 18 months and 30 odd viewings with the repetitive feedback 'needs a lot of work', decided to take the plunge.  I spoke to a few people who had sold their parent's properties at auction and they all saw it as a positive experience.

I sold at a huge loss, but as it was at the very beginning of Covid, I was very nervous of the future without viewings being allowed.  I made the difficult decision to settle for less as it gave me the freedom from the worry.  

I didn't ask for the buyer to pay any of the fees due to my anxiety at selling it, and I should have done.  I paid £795 to enter the catalogue, £1200 for my solicitor to process the legal pack and sale, and when I sold for £275K, £6,600 commission. 

The auction was on line because lockdown,  and the on line bids on the day were nowhere near the guide price.  The auctioneers rang me to say they were approaching all the viewers the next day.  The next day they rang me with an offer a huge amount under the 'guide price', but as it was enough for me to buy another small place, agreed.  The buyer asked for eight weeks to completion as he was getting a mortgage.  The extra month meant me getting more oil delivered, which the buyer then refused to pay for without negotiation, an unpleasant experience.

diystarter7

cymruchris said:

Have you looked at the option of changing estate agents? What contract have you signed with your existing agent in terms of 'get-out' clauses?

Hi

Changing EA's will not negate the real possibility of a potential buyer pulling out at the last mo

Therefore, IMVHO, auction all day long.

Thnaks

mi-key

If you had it listed for the past few months, that is always the quietest time for selling houses anyway, things pick up in the spring normally. It may be worth putting it back on the market, but at a reduced price and see if you get any interest. Even at a reduced price you will probably get a lot more than at auction. It depends really how quickly you need to sell and if you can wait a few more months. 

Auctions really are the end of the line for selling houses. They can be useful if a house has a lot of problems, or is unmortgageable or someone needs to get rid of it in a hurry, but other than that I would avoid them if possible

cymruchris

diystarter7 said:

cymruchris said:

Have you looked at the option of changing estate agents? What contract have you signed with your existing agent in terms of 'get-out' clauses?

Hi

Changing EA's will not negate the real possibility of a potential buyer pulling out at the last mo

Therefore, IMVHO, auction all day long.

Thnaks

Changing agent may change the 'pool' of buyers though - another agent may have people on file ready to buy this kind of property, they might take better photos, they may put more effort into selling it.

When selling a house, it's always good to look at all possible options to achieve your sale.

Sarah1Mitty2

cymruchris said:

Have you looked at the option of changing estate agents? What contract have you signed with your existing agent in terms of 'get-out' clauses?

Might be a plan, is it worth being with multiple EA`s?

london21

I have bought from auction once.

Avoid modern method, traditional auction is better.

Set a reserve price you are comfortable with. 

ArbitraryRandom

WestLondonOlga said:

"End user" buyers (ie, want to buy the house to live in, not to flip and sell on) often give feedback about the size of the garden.  It is relatively small for the size of the house, but I would say more an awkward shape rather than small.  Not much we can do about the size of the garden.

One of the main problems with auctions is the limited pool of buyers. There are developers or someone looking for something 'cheap' but a lot of normal buyers avoid anything that says 'auction' like the plague because they've heard the houses are a nightmare/it's only unmortgageable properties. 

If that truly is the thing putting people off, any chance of some pics of the garden? We might be able to help. 

Could be (especially with spring on the way) you could do something to tidy it up and make it feel welcoming that would overcome the issue of it being perceived as small - I'm speculating without seeing, but perhaps as simple as a screen and seating area to make a feature of the 'odd shape' by making it seem like an intentional private and intimate space to spend an evening? 

Or if you can share the listing, there might be some other impartial feedback we can offer that the viewers might be too embarrassed/not want to share? 

WestLondonOlga

youth_leader said:

I'm in the NE and sold at my EA's traditional auction.  I was trying to sell a listed building that needed a lot of work, and after 18 months and 30 odd viewings with the repetitive feedback 'needs a lot of work', decided to take the plunge.  I spoke to a few people who had sold their parent's properties at auction and they all saw it as a positive experience.

I sold at a huge loss, but as it was at the very beginning of Covid, I was very nervous of the future without viewings being allowed.  I made the difficult decision to settle for less as it gave me the freedom from the worry.  

I didn't ask for the buyer to pay any of the fees due to my anxiety at selling it, and I should have done.  I paid £795 to enter the catalogue, £1200 for my solicitor to process the legal pack and sale, and when I sold for £275K, £6,600 commission. 

The auction was on line because lockdown,  and the on line bids on the day were nowhere near the guide price.  The auctioneers rang me to say they were approaching all the viewers the next day.  The next day they rang me with an offer a huge amount under the 'guide price', but as it was enough for me to buy another small place, agreed.  The buyer asked for eight weeks to completion as he was getting a mortgage.  The extra month meant me getting more oil delivered, which the buyer then refused to pay for without negotiation, an unpleasant experience.

Thanks, that is really helpful, I know what sort of questions to ask.  I don't want to sell the house at too low a price, as a good half of it will go on paying the Equity Release debt, and then anything left over to be split between four of us, so am a bit wary of going to auction.

WestLondonOlga

eddddy said:

WestLondonOlga said:

One was early on in the process, but then interest rates went up. I think they were inexperienced developers too and hadn't got "all their ducks in a row".  The second ones pulled out, again developers, they gave their reason as they weren't going to get permission to make as many flats out of the house as they thought. The last lot were supposedly a straightforward sale, we had been led to believe, but then I was notified by my solicitors that they wanted to bring in an Option Agreement, so not straightforward at all.

So the property has development potential. In that case, a "traditional" unconditional auction could be a sensible choice.


To be honest, you might get more money if you agree to an Option Agreement (or Conditional Contract) with a developer, instead of an auction. So the developer only buys if they can get planning permission.

But that takes longer, and if planning permission is refused, the house doesn't sell - and you're back to square one.

And you really need an estate agent who is experienced in selling development property, and who has developer contacts, to do that.

Our last offer, which we accepted on the understanding that it was straightforward, chain-free and not subject to planning permission, turned out to be an Option Agreement and so we rejected that.  As you say, there is no guarantee at the end of the process that the house will sell, and all the time our interest on the equity release loan is building up.

We have had a lot of interest from developers but there is a top limit of what they will pay, because there is a top limit of what you can sell a 1-bedroom or studio flat in our part of London, and the feedback I have had is that planning permission would be straightforward for 5 flats but no more.

GDB2222

WestLondonOlga said:

eddddy said:

WestLondonOlga said:

One was early on in the process, but then interest rates went up. I think they were inexperienced developers too and hadn't got "all their ducks in a row".  The second ones pulled out, again developers, they gave their reason as they weren't going to get permission to make as many flats out of the house as they thought. The last lot were supposedly a straightforward sale, we had been led to believe, but then I was notified by my solicitors that they wanted to bring in an Option Agreement, so not straightforward at all.

So the property has development potential. In that case, a "traditional" unconditional auction could be a sensible choice.


To be honest, you might get more money if you agree to an Option Agreement (or Conditional Contract) with a developer, instead of an auction. So the developer only buys if they can get planning permission.

But that takes longer, and if planning permission is refused, the house doesn't sell - and you're back to square one.

And you really need an estate agent who is experienced in selling development property, and who has developer contacts, to do that.

Our last offer, which we accepted on the understanding that it was straightforward, chain-free and not subject to planning permission, turned out to be an Option Agreement and so we rejected that.  As you say, there is no guarantee at the end of the process that the house will sell, and all the time our interest on the equity release loan is building up.

We have had a lot of interest from developers but there is a top limit of what they will pay, because there is a top limit of what you can sell a 1-bedroom or studio flat in our part of London, and the feedback I have had is that planning permission would be straightforward for 5 flats but no more.

How much were the developers willing to pay for the option?  If nothing was offered, that would obviously be unacceptable, but a few% of the house value is pretty normal and would have helped offset the equity release interest.

It does seem that the house is ripe for development, so maybe auction is the best way forward. 

Or even apply for planning permission to convert it?