Auction pros/cons: 3 bedroom

[Deleted User]

Hi,

I inherited my parents 3 bed bungalow not too long ago, and my brother is wanting to sell it on, and i think that would be the best thing in the long run.



My question is:  Is there any downside to using an auction via the estate agent? I saw another company online, 'Good Move' who offers cash for properties, but i dont know much about this way of selling up.  The place would definitely need a remodel/modernising so i can understand why a new buyer may want a cheap deal.  Can anyone give me some pitfalls i may experience if using an auction to sell the place?  And should i go use an estate agent who sets the ball rolling with the auction company?  

Thanks!

lincroft1710

Why not approach a property auction company direct?

Albermarle

Companies like Good Move normally only offer cash once they have found a buyer, so you are most likely not going to get the instant sale you want.
Regarding Auctions, there are two types prevalent in the residential property market.
A traditional auction
Modern method of auction, often promoted by estate agents as they are the main beneficiary usually.

[Deleted User]

Albermarle said:

Companies like Good Move normally only offer cash once they have found a buyer, so you are most likely not going to get the instant sale you want.
Regarding Auctions, there are two types prevalent in the residential property market.
A traditional auction
Modern method of auction, often promoted by estate agents as they are the main beneficiary usually.

Ok, yes the EA did mention 2 types.   The one she suggested involved the EA marketing it with pics, 360 virtual tour and listing it all around the web, etc. I think there is a £400 fee, and 0% sales fee when sold.  Apparently the buyer or auction pays the fees to the EA or something like that.  Its a well established real estate agent in the area, so i think they will do a fair job.  The concrete construction is the drawback for a normal sale as mortgages are not easy to obtain, so it limits the buyers.  She mentioned that an investor would likely buy it, remodel it or convert it to traditional brick overlay.  So i expected a lower than market price.  Just wasnt sure if there are hidden costs or issues doing it this way.  Its a lovely place, with a beautiful 40+ year garden and trees.  Just a sad thing to sell it, but thats life i suppose.

youth_leader

I would think a bungalow would attract a downsizing cash buyer - I was a cash buyer when I bought this bungalow.

We have a local estate agent who work closely with an auction house and they have only marketed an acquaintances house for three weeks ... they are now encouraging her to 'go to auction'.  

I personally sold my listed building at a traditional auction - although it was on line as it was the start of lockdown - and I certainly didn't achieve anywhere near the anticipated price.  It cost me £800 to enter their catalogue, £1200 for my solicitor to do the legal pack.  It didn't reach the guide price on the day and the auction house said they'd be approaching all viewers - someone offered but wanted the weekend to 'pass it to his underwriters' - he was using a mortgage.  He did agree to proceed, but then wanted eight weeks to complete, which meant I had to order more oil.  He initially refused to pay for the oil I'd had to order because of his extended completion date, eventually we reached a compromise but I was furious.  I sold at £275K and I had to pay £6,600 commission, I'm bad at maths and hadn't taken the VAT into account.   I'd never do it again.   I had already moved into a rental up the road when the viewings were taking place, such young staff at the company I used, just one of them and sometimes a dozen people.  Mud was tramped into my chinese, and someone broke my Aga door.  I wouldn't recommend selling at auction.

RAS

Your EA is suggesting Modern Method of Auction in which potential buyers pay non-returnable £xk to make an offer. Most people refuse to even look at MMA.  Given the small market for your property, removing the bulk of the other buyers seems a bit self defeating?

Given the size of the plot is there scope to rebuild, say 2 Houses or even a small block of flats on the plot? Might be worth looking at other plots in the same area, maybe paying for a meeting with local planning officers.

[Deleted User]

RAS said:

Your EA is suggesting Modern Method of Auction in which potential buyers pay non-returnable £xk to make an offer. Most people refuse to even look at MMA.  Given the small market for your property, removing the bulk of the other buyers seems a bit self defeating?

Given the size of the plot is there scope to rebuild, say 2 Houses or even a small block of flats on the plot? Might be worth looking at other plots in the same area, maybe paying for a meeting with local planning officers.

 Its a lot of work.  

RAS

MMA means paying say £6k upfront. Potential buyers lose that if they don't complete within a deadline. With a non standard construction, there'd be people hoping for a mortgage and failing. And people whose searches, planning queries etc aren't complete the deadline. Yet more money for the EA.

Given how many accepted offers fail to complete, the general advice is to avoid MMA like the plague. So you reduce your small pool of potential buyers even more.

Traditional auction could work as they attracts cash buyers. Looking at you photo, might be worth checking if the planners would agree to development of two houses on the site? Outline planning isn't expensive. What are utilities like? And Wifi?

Or hope for someone wanting a good site to rebuild. Amazingly, planners sometimes allow a property with one original corner to count as rebuild rather than a new house.

[Deleted User]

RAS said:

MMA means paying say £6k upfront. Potential buyers lose that if they don't complete within a deadline. With a non standard construction, there'd be people hoping for a mortgage and failing. And people whose searches, planning queries etc aren't complete the deadline. Yet more money for the EA.

Given how many accepted offers fail to complete, the general advice is to avoid MMA like the plague. So you reduce your small pool of potential buyers even more.

Traditional auction could work as they attracts cash buyers. Looking at you photo, might be worth checking if the planners would agree to development of two houses on the site? Outline planning isn't expensive. What are utilities like? And Wifi?

Or hope for someone wanting a good site to rebuild. Amazingly, planners sometimes allow a property with one original corner to count as rebuild rather than a new house.

yes, i watched some YT vids on MMA and i see there are some potential problems.  

youth_leader

A friend sold her house and land separately. 

She had a very large paddock at the back of her house and engaged an architect, who worked out that three bungalows could be built there. 

She sold the house first, having already sorted out the access down the side of the house to the land behind.  Unfortunately the first builder who wanted the land went bust - she has just finally completed seven years later.  I'm not sure if it was the buyer or the solicitor that caused the delay. 

NameUnavailable

A traditional auction would seem to be the best option for you - serious cash buyers (developers etc) buy at such auctions and when the hammer falls the property is sold and exchange takes place immediately.

Given the development potential I would think it would attract that kind of buyer - contact some auction co's and they will advise you. You set a reserve but they will want you to pitch it on the low side to get interest and hopefully a bidding war. You can also put 'special conditions' in the contract such as the buyer has to pay some or all of the auction fees.