When it comes to selling a property, there are two main options: selling via private treat with an estate agent, or at auction with a reputable auction house. These choices may seem the same – both sell properties and aim to get the best deal for their clients – but there are actually key and crucial differences, and knowing which distinct path is right for you might make all the difference in the sale or purchase. So, let’s go through just what sets these routes apart from each other.
Time frame
For a property being sold at auction, there is a set date when the auction will take place, usually around 3 weeks from the point of instruction. When the hammer falls on auction day, contracts are exchanged, the buyer pays a non-returnable and is legally bound. It means you could have sold your property and exchanged contracts within a month of first talking to the auctioneer.
For properties sold through estate agents, the timescale can vary and is dependent on many factors such as the situation of the property, the chain and individual circumstances of each party. The time between offer acceptance and exchange of contracts/completion takes an average of 3 months, and more often than not, can take even longer than this. The property can be on the market for just a few days, weeks or months, depending on interest. Once a buyer is found, a survey and legal checks must be carried out to both party’s solicitor’s satisfaction, then an exchange date is set. Time frames for private treaty sales are uncertain and cannot be predicted.
There is no faster method of sale than auction which is very attractive to some, but not all sellers. Which method of sale you choose will probably be based on your own circumstances, rather than the property you are selling.
Pricing
When you’re looking at an auction catalogue, the ‘guide price’ is usually lower than what is considered market value, the aim being to achieve a higher price through competitive bidding. The seller will also have agreed a reserve price, the minimum price the property can be sold for which must be within 10% of the published guide price. The properties that receive the most attention and create lots of bidding at auction are usually those with the most attractive guide and reserve prices.
With estate agents, the asking price usually leaves room for negotiation.
It’s fair to say then, with auction the price starts below market value and that bidding may result in a higher sale price while with estate agents, the eventual sale price may be less than the asking price.
Legal checks
For a sale at auction, the legal checks and due diligence must be performed before the auction takes place to ensure the buyer is fully informed and completely confident with their intended purchase, as once the hammer falls, contracts are exchanged. The sellers legal representative bundles all the conveyancing documents together in advance of auction and this is called a Legal Pack. Sellers must provide the legal packs, but most auctioneers provide services to help assemble them within the short time frame.
With estate agents, it is standard practice for an offer to be agreed before any legal checks take place. Legal checks, known as the conveyancing process are carried out after acceptance of an offer and prior to exchange of contracts. Matters that causes concern to a buyer or their legal advisor can result in delays and potentially, further negotiations on the purchase price.
Type of properties
Any type of property can be sold with either method of sale. However, estate agents usually offer residential properties that attract buyers reliant on mortgage finance looking for a property to call home. With auction, you are likely to find a wider variety of types of property on offer including those that can’t be mortgaged. For example, properties with potential, plots of land, garages, ground rents, commercial and office buildings. These properties attract investors and cash buyers seeking opportunities to add value to a property or create income. However, the accessibility of online auctions has resulted in an increase in the number of buyers, bidding to buy a long term home.
Location
Typically, estate agents will deal solely with properties contained within their local area with an office on hand to provide information in person and conduct property viewings. Property auctions can deal with properties all over the UK. Online auctions have made this process far more accessible and widened the audience for property auctions, allowing people to bid from the convenience of their homes or offices all over the world.
Every property is different, and every circumstance around selling or buying it is different. It’s just figuring out which method works best for you and your situation. If you’d like to know more about how best to sell your property or wish to explore the benefits of each in more depth, don’t hesitate to get in touch.
