Auctions were once the domain of deceased estates and abandoned factories – but now a luxury estate agent has launched an auction service. Is this a sign that struggling sellers are increasingly turning to auctions?
Fine and Country recently announced it will offer movers the chance to sell their homes at auction across its UK offices. The move comes after recent data showed top-end properties are struggling to attract buyers in the current market.
Which? looks at why auctions might soon become the latest trend for struggling sellers, and assess the pros and cons of putting your home under the hammer.
Luxury agency to offer auction sales
The upmarket estate agent Fine & Country will begin offering properties for sale at auction across its 200 offices from next year, marking a shift in its previous sales approach. Vendors can opt to risk a bidding war, or stick to more traditional sales.
Announcing the move, chief executive David Lindley said: ‘The modern method of auction is no longer reserved for homes at the bottom end of the market’.
While the full roll out won’t happen until 2018, the first Fine & Country property to sell at auction last week attracted 21 viewings and 34 bids, and sold for £1.56m, 80% above its starting price.
Higher priced homes failing to sell
Up until recently, prime property was a sellers market, with homes snapped up quickly at above-the-odds prices. In the last three years, the tide has begun to shift, with taxation reforms and economic uncertainty putting the brakes on activity.
This is particularly the case in the capital, where prime central London values are 15% below their 2014 peak.
There are even signs the malaise is spreading beyond prime property. Earlier this week, data from the portal Rightmove found that more than a third of sellers have cut their asking prices – the highest percentage since 2012.
Prime market set for slow growth
Forecasts published by Savills earlier this month predicted that price growth in prime markets won’t fully recover until 2020.
The interactive chart below shows how prices are expected to remain stagnant in 2018 before rising steadily over the following years – though keep in mind that this is a forecast only, and growth is never guaranteed.
Selling your home at an auction
With all of this in mind, a property auction may help you sell a home you’re struggling to shift using traditional methods. If many buyers turn up, competition could drive up the price. Auctions also allow you to move quickly with minimal complications.
It’s not all fun and games, however. You’ll need to think carefully about your reserve price to ensure you don’t let go of your home for less than market value.
Auctions can also be more expensive than using an estate agent. Auctioneers will usually charge a fee of a few hundred pounds, and you’ll need to pay commission of around 2.5% plus VAT when your property sells.
You’ll also need to ensure you have a solicitor to prepare the legal pack and contracts ahead of the auction day.
- If you’d like to learn more about how auctions work and get to grips with the pros and cons of selling your home this way, check out our full guide on property auctions.
Could you grab a bargain at a property auction?
Buying at auction isn’t quite as easy as it seems on Homes Under The Hammer.
You might get a cheaper deal and won’t need to worry about being gazumped, but if you fail to win the lot, it could cost you a pretty penny.
Before attempting to buy a property at auction, you’ll need to have a 10% deposit ready to pay on the day, and have access to the remaining funds within 28 days.
All of this means you could end up spending a lot of money on a property you ultimately miss out on.
Buying a home at auction: three things you need to know
To get some insider tips on buying a property at an auction, check out our two minute video on the three top things you need to know.