If you want to beat the incoming stamp duty deadline when buying your next home, but you still have to sell your existing property, you’ll need to sell quickly.
Currently, buyers in England pay no stamp duty on the first £500,000 of a property’s purchase price – meaning savings of up to £15,000. But the so-called stamp duty ‘holiday’ is set to end on March 31.
So, if you’re looking to sell your house quickly, what can you do?
An auction can be a great way to speed things up and beat that deadline…
Selling a house quickly? Auction your house…
If you’re looking to sell your home quickly, putting it up for sale at an auction can be a great way to secure that speedy sale.
But, of course, selling a house at auction isn’t a conventional way to sell, so there are things you should be aware of first…
The pros and cons of selling your house at auction
• Your property could sell quicker than on the open market
• Your buyer won’t be in a long chain
• Your buyer can’t pull out of the deal once agreed
• You could secure a good price due to competitive bidding
• There’s no guarantee your home will sell at all
• You could end up selling for less than on the open market
• Auction fees can be higher than estate agent fees
• You’ll have to move out quickly once your home is sold
Selling property at auction: The process
The first thing to do if you want to sell your house at auction is to find an auctioneer.
In the same way you would when looking for an estate agent to sell your home, do some due diligence on auction houses and ask around for recommendations on a good auctioneer.
Checking out auction house promotional material can also be a good way of rooting out the best auctioneers.
But remember: The cheapest auction house might not always be the best in terms of showing off your property in its best light and attracting the right buyers.
An established, well-known auction house may be more expensive, but could end up netting you more buyer interest and a better sale price.
Set your guide and reserve prices
Once you’ve found an auction house to sell your property, you should speak to the auctioneer about setting both a guide price and a reserve price.
A guide price is the price shown to the public and should be used to develop interest among potential buyers, so it needs to be the right price for the market.
Your auctioneer will be able to advise you on a guide price based on current market conditions and levels of buyer interest.
Your reserve price is the minimum amount you’re willing to accept for your property.
The public won’t know this amount, but if buyers don’t reach it at the auction, your property will remain unsold.
Build-up to auction day
In the weeks leading up to the auction, and with your property marketed in promotional material and in a legal pack, interested buyers may wish to look around the property.
So, make sure you’re available to host any interested parties and make sure your home is looking its best – as you would if you were selling through an estate agent.
You should also publicise the fact your property is going up for auction on your own social media channels and ask friends and family to spread the word, too.
What happens when your house is sold at auction?
If a buyer meets your reserve price or above, the auctioneer will drop the hammer and your home is sold on the spot.
You will exchange contracts with the buyer there and then at the auction house, so when it comes to quick sales, there aren’t many quicker!
Of course, the speed with which properties are sold at auction means there is no time for cold feet, so make sure you’re certain selling at auction is the right thing for you well in advance of the sales day.
Once you have exchanged contracts, your buyer will need to pay a 10% deposit on your property at the auction and they then have a further month to pay the remaining 90% of the sale price.
How much does it cost to sell a house at auction?
The cost of selling a house at auction can vary, depending on the percentage fee demanded by the auctioneer.
Most auctioneers charge around 2.5% of the property’s sale price as a fee, while you’ll also need to factor in things like solicitor fees and potential advertising costs with the auctioneer.
Selling at auction can be more expensive that selling on the open market, with estate agents generally charging less in commission than auctioneers.
Selling a house with subsidence at auction
Many properties that come up for sale at auctions are homes where structural issues mean they wouldn’t be easily sold on the open market.
Subsidence is one such issue and can be hugely off-putting for buyers due to the costs associated with rectifying the problem.
Auction buyers, however, are usually cash buyers and investors looking for a project to renovate and sell on for profit, so auctions can be a great place to sell if your property has major structural issues.
Do houses sell cheaper at auction?
Some properties are sold at auction because they aren’t suitable for the open market.
This could be because they have issues that mean a buyer wouldn’t be able to secure a mortgage.
However, there’s no guarantee you’ll be able to purchase a property at auction for less than on the open market and many that go under the hammer sell for more than they would on the open market.
The real benefit of buying and selling at auction lies in how much quicker the process can be.
Different methods of auction
If you look to sell your house through an auction house, it will be done using the Traditional Method of Auction.
Under the traditional method, your buyer will lodge a 10% deposit immediately and you exchange contracts at the auction house.
Your buyer then has a further 28 days to complete their purchase.
Under the Modern Method of Auction, your property will usually be put under the hammer online, with the successful buyer paying a non-refundable reservation fee to secure their purchase.
They then have 56 days to complete the purchase, giving them time to source finance should they need to.
At CJ Hole, we work with online auction provider iamsold and could sell your home in as little as 44 days through the Modern Method of Auction.
Get in touch to find out more.
What happens when the stamp duty holiday ends?
When the stamp duty ‘holiday’ ends, stamp duty rules will revert back to those that were in place prior to July 2020.
Buyers will pay no stamp duty on the first £125,000 of a property’s purchase price
First-time buyers will pay no stamp duty on the first £300,000 of a property’s purchase price
Landlords and buyers of second homes will continue to pay a 3% additional home surcharge
Will the Chancellor extend the stamp duty holiday?
Calls have been made for an extension to the stamp duty deadline as thousands of buyers try to get their purchases completed in time, while also managing the impact of another Covid-19 lockdown.
However, the Chancellor has now said the deadline will not be extended, meaning existing and new buyers have less than three months to complete and secure the savings.
If you’re thinking of selling your home at auction, you should take a look at our comprehensive guide on selling so you can be sure it’s the right step for you.
If you’re a first-time seller, meanwhile, our guide to selling a property for the first time can help you through the process.
And if you’re looking to freshen up your property before selling it, our tips for home improvements can help you add some value and interest from buyers before your For Sale board goes up.