Selling a property via auction

Kim_13

If an auctioneer won't take it on, no one will but it still needs to have an EPC. There can be a reserve, but most likely you'll be limited to 10% over the guide price and bidding will open at below the guide price.

My late grandmother's property sold at auction. It was in need of modernisation and doing the work would just have meant incurring Capital Gains Tax. Meanwhile, full Council Tax was being charged. It had failed to sell on the open market prior, with a lack of parking being an issue. It never bothered my grandmother, as she didn't drive, but it meant that it limited its appeal to others in a similar position or developers.

It is good in that once the gavel goes down, the price is the price. They can't ask for a survey later and/or want X off for this and Y for that. The auctioneers, though, did leave something to be desired in some ways. There were keys left in internal doors which they moved before viewings commenced, and then forgot where they put them. The eventual buyer found them in the airing cupboard. One viewer forced a window and broke it. The auctioneers seemed surprised to be informed of this, so couldn't have been keeping a close enough eye on them.

Their terms contained some clauses we weren't particularly comfortable with, such as that if contracts were exchanged but the sale didn't complete for any reason, half of the commission was due. It seemed a fair enough clause if the seller decided to renege, but not if it was the fault of the buyer they introduced, as any compensation due would need to cover ongoing CT/another catalogue fee and other costs associated with having to wait for another auction date. There are less auctioneers than EAs, so it might be a case of accept or be stuck with the property. They were also supposed to arrange a meeting to discuss interest in the property a week before the auction, at which the reserve would be set, but did not do so. When chased, they agreed the reserve over the phone but only emailed the form (which needed signing before the auction) to one of the property owners rather than both the day before the auction. Thankfully we had a personal number to get it sorted.

Completion took almost twice as long as the maximum it should have done according to their terms. A week of that was down to the buyer not having the money come completion day and asking for an extra week, but the auctioneers, the solicitors and the buyer's solicitors were playing ping pong with the blame for the rest and nothing was ever done about it. The buyer didn't even pay the cost of the CT for the extra week they asked for, even though the sale could have been pulled forfeiting them their deposit. So it seemed that the auctioneers check that the bidder has enough to pay their deposit, out or which they take their fees, via requiring them to have a card with sufficient funds on file before they can bid, but don't actually check that the buyer has or will have the funds to complete.

I checked the other properties that sold on the same day and the one that did the best (number of bids and amount over guide price price it sold for) was a property of non-standard construction that must have been auctioned as no one could get a mortgage on it.

RHemmings

Thanks for sharing your experience, @youth_leader. Others, including me, can learn from what happened to you and benefit from that. 

youth_leader

Sharing it helps RHemmings, it was such a dreadful time.  The station had 18 steps at the front and the removal companies refused to come, saying they weren't 'essential' workers.  I had managed to find a rental in the same road very luckily, and ended up moving everything myself, sliding my packing boxes down the stairs on my kids plastic sledges.  Not great for a listed building's steps, but needs must at the time. 

I had to lose all of my big furniture which the developer accepted for free, luckily - the  removal company said if I managed to stack it all in a room, they'd come early on the day of completion and remove it for £50 per item.  I could hardly lift the drawers, let alone the chests/wardrobes, I had to let it go.

RHemmings

youth_leader said:

Sharing it helps RHemmings, it was such a dreadful time.  The station had 18 steps at the front and the removal companies refused to come, saying they weren't 'essential' workers.  I had managed to find a rental in the same road very luckily, and ended up moving everything myself, sliding my packing boxes down the stairs on my kids plastic sledges.  Not great for a listed building's steps, but needs must at the time. 

I had to lose all of my big furniture which the developer accepted for free, luckily - the  removal company said if I managed to stack it all in a room, they'd come early on the day of completion and remove it for £50 per item.  I could hardly lift the drawers, let alone the chests/wardrobes, I had to let it go.

Thanks again for sharing. Your experience is I think an important one for people considering auction to consider. 

johnc

Came across this old thread as I am trying to decide whether to sell my beautiful 1 bedroom Top Floor Warehouse Conversion Flat at auction - the East London Property market is not great and I have had it on with Yopa but very little interest and they have suggested I can put it on auction with them with no costs - wondering whether I should do that or not. It seems from scanning the previous comments that experiences have been generally negative? 

youth_leader

My experience was double negative at auction because the person that bought it had to get a mortgage and made me wait eight weeks - I had thought it was completion in four weeks and all cash buyers.

I'd change from Yopa to a local EA.  Good luck.

eddddy

johnc said:

Came across this old thread as I am trying to decide whether to sell my beautiful 1 bedroom Top Floor Warehouse Conversion Flat at auction - the East London Property market is not great and I have had it on with Yopa but very little interest and they have suggested I can put it on auction with them with no costs - wondering whether I should do that or not. It seems from scanning the previous comments that experiences have been generally negative? 

That company generally do 'conditional auctions' - also known as the 'Modern Method of Auction'.

Knowledgeable buyers tend to avoid those auctions. This snippet from their auction catalogue explains why...




So the buyer has to pay a fee of (at least) £6.6k - which goes to the auctioneer, not to you as the seller.

• So as a starting point, people will bid £6.6k less than they think the property is worth, to cover the auction fee

• That £6.6k is part of the purchase price for mortgage purposes. So the buyer needs £6.6k in cash on top of their mortgage deposit

• The auction approach doesn't work if there's a chain. So if you need to buy a home to live in, or your buyer needs to sell their current home - an auction isn't really viable.

But, much, much worse than that.... the £6.6k the buyer pays is not refundable. So if, for example...

• The buyer's mortgage lender refuses to lend on your property
• The buyer's survey finds big problems
• The buyer's searches and pre contract enquiries uncover big problems
• The buyer realises that you (the seller) has told them a bunch of fibs
• etc, etc, etc

... and so the buyer withdraws, the buyer loses the £6.6k (the auctioneer keeps if for themselves).

So sensible buyers wouldn't buy through that kind of auction.



Taking a step back, if you have a property that's difficult to sell - I'd suggest that you might have chosen the wrong type of estate agent. In your position, I'd go for a much more 'traditional', 'hands-on' estate agent.

ReadySteadyPop

Traditional sale if possible, and drop the price until there is genuine interest.

johnc

youth_leader said:

My experience was double negative at auction because the person that bought it had to get a mortgage and made me wait eight weeks - I had thought it was completion in four weeks and all cash buyers.

I'd change from Yopa to a local EA.  Good luck.

Thanks for the input - sorry to hear that though if that happened for me I wouldn't mind the wait or if they were not a cash buyer - I'm more concerned about selling my place rather than having to rent it out since I just moved abroad. So if an auction gets me a sale instead of it currently looking like it will not sell at all then that's a huge plus for an auction for me. I have already reduced the price and even willing to reduce it further. 

I don't really want to change from Yopa to a local EA for two reasons:

a) I paid up front so already spent £2K to Yopa (which in hindsight was a bad idea paying up front though I had not anticipated the scenario of my place not selling since it's a gorgeous Penthouse Flat but now realising the market in East London is just terrible) therefore not keen to spend another £2-3K to a local EA

b) From what I can see with others in my Development selling flats, the local EA's are no different - in fact the reason I went with Yopa is because the local Agent for Yopa probably has more experience and knowledge of the local area than most of the local EA's - plus she sold a similar flat in my Development last year but last year was better than this year as far as my local market. Plus it seems with all EA's all they do is field enquiries from Rightmove etc - that's all. Except maybe Foxtons which is slightly more aggressive in trying to get people who are looking in areas outside that local area to consider mine (I bought through Foxtons originally and that's what they did to me since I didn't really consider the area I bought in before I saw the flat).

johnc

eddddy said:

johnc said:

Came across this old thread as I am trying to decide whether to sell my beautiful 1 bedroom Top Floor Warehouse Conversion Flat at auction - the East London Property market is not great and I have had it on with Yopa but very little interest and they have suggested I can put it on auction with them with no costs - wondering whether I should do that or not. It seems from scanning the previous comments that experiences have been generally negative? 

That company generally do 'conditional auctions' - also known as the 'Modern Method of Auction'.

Knowledgeable buyers tend to avoid those auctions. This snippet from their auction catalogue explains why...




So the buyer has to pay a fee of (at least) £6.6k - which goes to the auctioneer, not to you as the seller.

• So as a starting point, people will bid £6.6k less than they think the property is worth, to cover the auction fee

• That £6.6k is part of the purchase price for mortgage purposes. So the buyer needs £6.6k in cash on top of their mortgage deposit

• The auction approach doesn't work if there's a chain. So if you need to buy a home to live in, or your buyer needs to sell their current home - an auction isn't really viable.

But, much, much worse than that.... the £6.6k the buyer pays is not refundable. So if, for example...

• The buyer's mortgage lender refuses to lend on your property
• The buyer's survey finds big problems
• The buyer's searches and pre contract enquiries uncover big problems
• The buyer realises that you (the seller) has told them a bunch of fibs
• etc, etc, etc

... and so the buyer withdraws, the buyer loses the £6.6k (the auctioneer keeps if for themselves).

So sensible buyers wouldn't buy through that kind of auction.



Taking a step back, if you have a property that's difficult to sell - I'd suggest that you might have chosen the wrong type of estate agent. In your position, I'd go for a much more 'traditional', 'hands-on' estate agent.

Thanks - this is really helpful knowledge about the auction format and details. As you said that presents a real challenge for buyers but then perhaps if those scenarios don't happen for the buyer (I know my place there are zero issues with my property) then this could be a good way to sell - looking at it from my perspective putting it on the auction I don't lose anything. For the auction do potential buyers get to see the property in person as it would be good if they can do that - I would prefer anyone buying the property to see it before bidding. 

No my property would not normally be difficult to sell - it's a gorgeous Factory Conversion Penthouse Flat, High ceilings, amazing unobstructed views to the skyline, Right to Manage Development meaning no ridiculous Property Management Company etc, decent lease of 100 years (hopefully will change to 999 years with the new legislation), service charges reasonable that if I had sold in 2022 before the downturn in East London could have sold for £400K (I was approached for an offer of £400K but at the time I was living in it - now I have just moved abroad) - I have just reduced it to £325K and still no viewings even. My agent tells me she has never seen East London Property market like this and apparently it's a combination of factors - cost of living, people preferring West London now because of rising crime in East London, competition since there's lots of new builds that have gone up and the Developers have lowered their prices. 

Of course the obvious thing would be to not sell now and rent it out since rentals are so high - and I may have to do that but I just preferred to sell and not be a Landlord (did it before years back for a year and it was not something I enjoyed - terrible Property Management companies and not ideal tenant either). 

So I may well consider trying the Yopa Auction route - I will have a conversation with them and ask them more about the £6K and whether there are any options around that.