There are various kinds of properties that may be suitable for sale at an auction. These include properties that are hard to value or that need renovation, properties that are let to tenants, and properties that need planning permission for their use.
The main advantages of selling at an auction are certainty of sale upon the fall of the hammer, and the speed that the sale contract is binding on acceptance of a bid at auction, which cuts out lengthy negotiations. Ease and efficiency are also incentives – the popularity of online platforms for property auctions, rather than the traditional in-person style, has in some ways transformed the auction process.
The primary disadvantage of an auction sale is arguably the cost. The seller has to pay the auctioneer’s fees even if a property is not successfully sold. If it is sold, the auctioneer’s commission fee could also be higher than an agent’s fee on a private sale. There is though the chance that the seller may ultimately gain more than what it was expecting, if bids are made beyond the set “reserve price” of the property. The final buying price may therefore be higher at an auction than in a privately arranged sale.
The auctioneer will have various deadlines for the seller to submit items for the auction of the property. Traditionally known as an “auction catalogue”, which contains specific details of the property to be sold, the equivalent with online platforms may be known as the “particulars of sale page”, which goes live on a set date. The content of the draft or “proof” particulars of sale page need to be reviewed by the seller and its legal advisers to ensure that it is accurate prior to the deadline.