We will be pleased to discuss with you the possibility of including your particular property in our next Auction, the cost and any other implications. This page is to give you initial guidance. A similar leaflet gives guidance to those considering buying at Auction. Please ask for a copy.
How does an Auction work?The property is advertised for sale by Auction, rather than at a fixed price. Those interested in buying attend a competitive Auction, conducted by an Auctioneer, at which the person who bids highest buys the property.
The successful bidder is legally bound to purchase when the Auctioneer’s hammer falls on his bid. The successful bidder pays a 10% deposit there and then and has to complete the purchase on the stated completion date – normally 4 weeks after the Auction date. The buyer must arrange finance, arrange a survey and make any enquiries before he bids.
What are ‘Guide Prices’ and ‘Reserves’?An Auction is most likely to be successful if prospective buyers feel they have a reasonable chance of being able to buy the said property. More attractive still is the prospect of a buyer believing they can capture a bargain. So we will normally advise that a guide price (often a range of figures) is quoted.
At the same time the seller is seldom prepared to sell at any price. Accordingly we will advise on a figure below which the property will not be sold – the reserve price, this is to guarantee that the property is not sold at a price which is obviously far too low.
The recommended reserve will usually be a little less than we expect to achieve for the property. Genuine competition in the room is the thing that can lead to a really good price being achieved and too high a guide price and reserve can hinder this happening.
The reserve price is usually not fixed until a day or so before the Auction. It can then take account of the amount of interest shown. Under normal circumstances, prospective buyers will be told the guide price BUT NEVER THE RESERVE.
It is important that any guide price should fairly reflect what we feel the property could be bought for – otherwise buyers will distrust the guides quoted and may not attend to bid. So the guide price range will usually be similar to the expected reserve. Once a guide price has been agreed with the seller, we will not normally then accept instructions to adopt a significantly higher reserve.
A seller does not have to give a guide price. Nor do they have to adopt a reserve. When a property is advertised as being sold ‘without reserve’ it means a buyer could, in theory, buy it for only 1p! Occasionally, we accept instructions to disclose the reserve price. Selling with a disclosed reserve usually means it is essential to sell the property. To be effective, a disclosed reserve needs to be well below open market value.
Can any property be sold by Auction?Yes, however, as our valuers will comment to a client on valuation, Auction may not always be the best way.
Because buyers have to be in a financial position to be able to proceed straight away and because of the risk that costs of legal enquiries and having surveys done may all be wasted, many people who might have been interested in buying your property may not be prepared to bid at Auction.
So certain types of property are more suited for sale by Auction:
Those for which there is likely to be strong competition – so that it does not matter if some prospective buyers are not able to bid
Those that are most likely to appeal to cash buyers (rather than those with a property to sell or needing to borrow) – for example building plots and properties needing renovation or redevelopment
Those with serious defects, such that buyers by Private Treaty might be expected to keep pulling out due to ‘cold feet’
Those where it is very difficult to predict the likely sale price – for example disused military installations.
Why are other types of property sometimes sold this way?A number of sellers consider Auction, even when the property is not ideal.
Executors, especially when there are several beneficiaries, so that everyone knows the sale has been even-handed
Charities and Public bodies - for similar reasons
Sellers with a tight time-scale (emigrating for example) – but a very competitive guide price and reserve may be required
Lenders who have foreclosed on a mortgage
What are Special Conditions of Sale?These, together with the General Conditions of sale (and sometimes a Plan and the Sale Particulars) make up the Contract which the buyer will sign in the sale-room. They detail things like the date for completion but also matters such as covenants and restrictions on the property.
Is this a guaranteed way to sell?No.
If no one bids, or no one bids as much as the reserve price, the property will not sell. It is then ‘withdrawn’. Properties which have been withdrawn are often then offered for sale by Private Treaty. Whilst sometimes unavoidable, this is not an ideal outcome. Cost and delay will have been incurred and some possible buyers will feel there is a stigma attached to the property if it has been withdrawn unsold from an Auction.
So what gives the best prospect of success?The right property
Adequate time for marketing – at least 4 weeks and preferably 6 from the date of instructions
Effective marketing – from advertising through Auction Particulars to the conduct of the Auction itself
A realistic guide price and reserve – pitched to attract buyers
And what does it cost?
In terms of Agency fees, selling by Auction is a little more expensive than selling by Private Treaty.
The sale commission charged by Westbrookes Auctions will be the same as that by Private Treaty – and is payable only if the property is sold.
But there are extra costs to the Auctioneer. Auction room hire; additional advertising; the printing and distribution of lengthier sale particulars, often circulated to more people; the arrangement (and often accompanying) of larger numbers of viewers. To cover all these, we will agree with you a single payment known as an entry fee.
Can I change my mind?Yes.
As with a Private Treaty sale, you can withdraw the property from sale. The entry fee will still be chargeable however, together with any commission arising from a sale of the property arranged during any agreed sole agency period.
You can also decide to sell prior to Auction if a good offer is received. Although you will take the decision, Westbrookes Auctions will normally only recommend selling prior when...
The buyer is prepared to sign a contract – ideally at least a week before the Auction to allow other bidders to be told.
The offer is at least as much as could have been expected in the Auction room and preferably significantly more.
How do I get more information?
Please discuss any technical query about the process, forthcoming Auction dates etc either with Westbrookes Auctions on (0115) 929 9295 or the firm’s Auction co-ordinator Mr A.J.Hare Westbrookes Auctions, 401a Aspley Lane, Nottingham NG8 5RR tel: (0115) 929 9295 email: firstname.lastname@example.org
As with any property, we will be pleased to inspect your property and advise on its value and the most appropriate method of sale, without charge or obligation.