Sell Your House at Auction

What does selling a house at auction mean?

Selling at auction means offering your property publicly to bidders on a set date, rather than listing it with an agent and negotiating privately with one buyer at a time. The property is catalogued as a lot, given a guide price, marketed for a few weeks and then sold to the highest bidder, provided the bidding reaches the minimum you have agreed with the auctioneer.

Most auctions now run online rather than in a room with a gavel, but the principle is unchanged. Interested buyers register, they inspect a legal pack prepared by your solicitor beforehand, and they bid knowing they are buying the property in the condition it is in. That last point is the reason auction attracts investors, cash buyers and developers far more than it attracts ordinary homebuyers with a mortgage.

The appeal for a seller is the deadline. Instead of an open ended marketing period, there is a date in the diary, and the sale either happens on that date or it does not. The risk sits in the same place. You are committing time and money to a process with an outcome nobody can promise in advance.

How does selling a house at auction work?

The process is more involved than most people expect, and it is worth walking through it properly before you decide.

Step one: appraisal and choosing an auctioneer

An auctioneer inspects the property, or reviews it remotely, and suggests a guide price based on recent auction results for comparable lots. Auction values and estate agent valuations are not the same thing, so do not be surprised if the figure sounds low against what a neighbour achieved on the open market in good condition.

Step two: agreeing terms and the reserve

You sign an agreement with the auction company covering fees, the marketing period and the auction method. You also agree a reserve, which is the confidential minimum you will accept. Read this agreement carefully. It sets out what you owe if the lot sells, and in many cases what you owe if it does not.

Step three: the legal pack

Your solicitor assembles the legal pack. It usually contains the title register and plan, searches, the property information forms, leasehold documents where relevant, any tenancy agreements and the special conditions of sale. Bidders make their decision on this pack, so gaps or errors cost you interest and sometimes cost you the sale.

Step four: marketing and viewings

The lot appears in the catalogue and on the portals, typically for three to four weeks. Block viewings are common, where several interested parties look round at the same time. Serious bidders will send a builder or surveyor and will have their solicitor read the pack.

Step five: auction day

Registered bidders compete. If bidding passes the reserve, the lot sells to the highest bidder. If it stalls below the reserve, the property is unsold, although the auctioneer will usually try to negotiate a deal with the underbidder afterwards.

Step six: exchange and completion

What happens next depends entirely on the auction method. Under a traditional auction, contracts exchange immediately and the buyer pays a deposit on the spot. Under a modern or conditional auction, the buyer pays a fee to secure an exclusivity period and exchange follows later. Completion then runs to the deadline written into the auction conditions.

How quickly can you sell a house at auction?

People often hear that auction is the fast route and picture a sale wrapped up in a fortnight. The bidding is fast. Everything around it takes normal time.

Preparing the legal pack depends on your solicitor and on how quickly search results and management pack information come back, which can be a matter of days or several weeks on a leasehold flat. Marketing usually runs for three to four weeks before the sale date, and you may be waiting for the next suitable catalogue before that clock even starts. Then completion follows the period set out in the auction conditions.

As an illustration only, a straightforward freehold house entered into a traditional auction might be marketed for a month and then completed within the period specified in the conditions of sale, which is commonly a matter of weeks after exchange. A conditional auction typically allows longer, because exchange itself happens later. The honest answer is that the timeline depends on the auction method, the provider's terms and the legal work, and no auctioneer can guarantee a completion date at the point you instruct them. If speed matters more than anything else, it is worth comparing the auction timeline with a direct sale, which you can read about on our page about how to sell your house fast.

Traditional property auction explained

The traditional method, sometimes called the unconditional method, is what most people picture. When the hammer falls, contracts are exchanged there and then. The buyer pays a deposit, usually ten per cent of the price, and is legally committed. Completion normally follows within the period stated in the conditions of sale, which is often around twenty eight days but is set by the auctioneer rather than by law.

For a seller, the strength of this method is that it produces a real, binding contract on a known date. A buyer who walks away loses their deposit and can be pursued for losses, so the level of commitment is much higher than an accepted offer on the open market.

The trade off is that the pool of buyers is narrower. Anyone bidding needs their money ready, either cash or a bridging facility, because a standard residential mortgage rarely completes in that timescale. This is also why the legal pack and the special conditions matter so much. Bidders are contractually bound to whatever the pack contains, which is precisely why they read it so carefully, and why a poorly prepared pack quietly kills interest before auction day.

Modern method of auction explained

The modern method, also described as conditional auction, works differently. Winning the bidding does not exchange contracts. Instead the buyer pays a non refundable reservation fee and secures an exclusivity period, commonly twenty eight days to exchange and a further period to complete. That longer window lets a buyer arrange an ordinary mortgage, which widens the audience beyond cash investors.

The important difference for you as the seller is certainty. Because contracts have not exchanged on the day, a buyer can still fail to proceed. They lose their reservation fee, which is a real deterrent, but you are back to marketing the property again if it happens.

Terms differ significantly between providers. Who pays the reservation fee, how it is calculated, whether it counts towards the purchase price and what happens if either side withdraws all vary. Ask the auctioneer to explain their specific conditions and have your solicitor read the agreement before you sign. Two companies both describing their product as a modern auction can be offering you quite different arrangements.

How much does it cost to sell a house at auction?

There is no single answer, because auction companies price their services differently and some charge the seller while others load the cost onto the buyer.

An entry or listing fee is common, payable when the lot goes into the catalogue and often payable whether or not the property sells. Commission on the sale price is the main charge, and rates vary by company and by lot value. Marketing and advertising packages, including photography, floor plans, portal listings and catalogue space, may be included in the commission or billed on top. You will also have your own conveyancing costs, and preparing an auction legal pack usually costs more than a standard sale because searches and documents are needed up front. Some providers add administration or buyer's premium charges as well.

Before instructing anyone, ask for a full written breakdown of every charge, and ask specifically what you owe in each scenario: the lot sells, the lot goes unsold, or you withdraw the property before the sale. That last question tends to be the revealing one. Comparing two auctioneers on headline commission alone can be misleading if one includes marketing and the other does not.

What is a reserve price?

The reserve is the lowest figure you are willing to sell for. It is agreed privately between you and the auctioneer and is not published. If the bidding does not reach it, the auctioneer cannot sell the lot and the property is withdrawn unsold.

The guide price is a different thing entirely. It is a marketing figure published to attract interest and to indicate roughly where bidding is expected to open. Guide prices are usually pitched below the reserve to draw a crowd, and industry practice generally keeps the reserve within around ten per cent of the guide. A low guide price is a marketing tactic, not a valuation, and it is not the price you will receive.

Setting the reserve is the most important decision you will make in the process. Too high and you risk an unsold lot along with fees already spent. Too low and you could be legally bound to sell at a figure you are unhappy with. Discuss it frankly with the auctioneer and take your own view rather than simply accepting the first suggestion.

Will I get more money selling my house at auction?

Sometimes, and sometimes not. Competitive bidding between two determined buyers can push a price above what a private negotiation would have achieved, and that does happen, particularly with unusual properties or in an area where investor demand is strong.

There is no guarantee of it. Auction attracts buyers who are looking for value, and many of them are calculating a margin before they bid. If only one bidder turns up, the price stops just above the reserve. If none do, you have paid to market a property that has not sold.

The figure to focus on is what reaches your bank account. Take the sale price, deduct commission, entry and marketing fees, your legal costs and the outstanding mortgage, and compare that net figure with what other routes would leave you. A slightly lower headline price with lower costs can beat a higher one, and a property that sits unsold for months carries its own cost in bills, insurance and mortgage interest.

What types of property are suitable for auction?

Auction tends to work best where the buyer is likely to be an investor or developer rather than someone looking for a home, and where the property is difficult to value or difficult to mortgage.

Properties needing substantial repair are the classic example, along with unusual buildings such as former commercial premises, chapels or plots with development potential where nobody can be certain what the market will pay. Properties with legal or structural complications also suit the format, because everything sits in the legal pack for bidders to price in. Tenanted property, probate property, homes that have already struggled on the open market and straightforward buy to let investments all appear regularly in catalogues, as do sales where speed and a fixed date matter more than squeezing out the last few thousand pounds.

None of this means auction is automatically the right answer for those properties. It means they are the kinds of property auction buyers actively look for. A tired house in a popular street might do just as well with an agent, and a probate sale where the beneficiaries are in no hurry may be better off on the open market. The property type tells you auction is worth considering, not that it is the best route.

Selling a house that needs repairs at auction

A property with damp, an outdated kitchen and bathroom, structural movement or a failed roof is hard to sell in the usual way, mainly because most buyers need a mortgage and lenders down value or refuse properties in poor condition. Auction sidesteps that, because the people bidding are usually funding the purchase themselves and intend to do the work.

You are not expected to fix anything first. Bidders inspect, price the works and bid accordingly, which means the cost of repair comes off the price along with the developer's profit margin. That is the honest exchange: you avoid spending money and time on a renovation, and the buyer takes the risk and the reward. If your property falls into this category, our page on how to sell a house needing repairs covers the alternatives as well.

Selling an inherited property at auction

Inherited houses frequently end up in auction catalogues, and there are sensible reasons for that. The property is often unmodernised and full of belongings, executors rarely want to spend months managing a renovation, and where several beneficiaries are involved an open public sale removes any suggestion that the property was sold cheaply to somebody's contact.

The practical points are the legal pack and the timing. Executors need the title and probate position clear, and the property insured and secured while it stands empty. There is more detail on the process on our guide to selling an inherited house.

Selling a property during probate at auction

A property can be marketed at auction while probate is being obtained, but it cannot complete until the grant of probate or letters of administration has been issued where one is required. That creates a timing problem with the traditional method, because exchange happens on the day and completion follows within weeks.

It is manageable. Executors either wait for the grant before entering the lot, or agree special conditions with the auctioneer and the buyer's solicitor that reflect the probate position. Whichever you choose, tell the auctioneer early rather than discovering the issue after contracts have exchanged. Our page on selling a house during probate explains the sequence in more detail.

Selling a house with tenants at auction

Tenanted property often performs better at auction than it does on the open market. A home with sitting tenants is unattractive to an ordinary buyer who wants to move in, but it is exactly what a landlord wants: an income producing asset from day one, with no void period and no letting fees.

The legal pack needs to be thorough. Include the tenancy agreement, the deposit protection details, the rent payment history, the gas safety and electrical certificates, the energy performance certificate and any notices already served. Tenants keep their rights when ownership changes, so the buyer inherits the tenancy as it stands. If you would rather avoid the marketing period altogether, our page on selling a house with tenants sets out the other options.

Auction versus estate agent

Estate agents get unfairly criticised in auction marketing, so it is worth being fair about the comparison. Both routes are legitimate and they suit different situations.

On speed, auction gives you a fixed date, while an agent sale runs for as long as it takes to find a buyer and get them through a chain. On certainty, a traditional auction is stronger than almost anything else, because exchange happens in the room. An agreed sale through an agent is not binding until exchange, which is often two or three months later, and a meaningful proportion of agreed sales fall through.

On fees, agents typically charge commission of one to three per cent plus VAT and usually on a no sale, no fee basis. Auction commission is often similar or higher, and entry or marketing fees may be payable regardless of the outcome. On marketing, an agent markets continuously and can respond to feedback, while auction concentrates everything into a short campaign aimed at a smaller, more transactional audience.

On price, the open market usually achieves more for a property in good condition, because owner occupiers will pay for a home they have fallen in love with in a way that an investor will not. On competition, auction is more visible, since bidders see each other and that pressure can work in your favour. On control, an agent sale keeps you in charge of accepting or rejecting each offer, whereas at auction the reserve is your only control and once it is passed the property is sold. On risk, auction carries the possibility of costs with no sale, while an agent sale carries the risk of a long wait and a collapsed chain. If you are considering avoiding an agent entirely, our page on selling a house without an estate agent covers the alternatives, and if your property has already been listed without success you may find our guide on a house that will not sell useful.

Auction versus cash buyer

These two routes are often set against each other because they appeal to the same seller: someone with a property that is hard to mortgage, or someone who values a firm outcome over the highest possible figure. They work quite differently though.

On speed, a cash sale can begin immediately, because there is no catalogue to wait for and no marketing period. Auction adds those stages at the front, and completion then follows the auction conditions rather than a date you choose. On certainty, a traditional auction is binding at the fall of the hammer, which is very strong, but only if the lot sells. A cash sale is not binding until exchange, although the buyer's funds are already in place and there is no chain above them.

On fees, auction may involve entry costs, marketing costs and commission. A direct sale to us involves no fee charged to you and no commission, though you still pay your own solicitor in both cases. On condition, both routes accept a property as it stands, and neither expects you to repair, redecorate or clear it. On buyer competition, auction is the clear winner, since a cash offer is a single figure from a single buyer with no bidding to push it up.

On price, auction can beat a cash offer where genuine competition exists, and can fall short of it where interest is thin. A cash offer is typically below the open market asking price and is known before you commit to anything. On seller involvement, auction means viewings, a legal pack prepared in advance and a public marketing campaign, while a direct sale involves an inspection and very little else. On the legal process, both use ordinary conveyancing, although auction packs must be ready before marketing starts and the auction conditions impose the deadlines.

The biggest single difference is what happens if it does not work. An unsold lot leaves you with fees, a property still on your hands and a decision to make about relisting. A declined cash offer costs you nothing at all. You can read more about how a direct purchase works on our pages about selling a house for cash and selling a house fast, or you can simply request a free cash offer and use the figure as a benchmark when the auctioneer gives you their appraisal.

What happens if my house does not sell at auction?

Lots go unsold regularly and it is not a disaster. The usual reason is simply that bidding stopped below the reserve.

What follows is normally a conversation with the auctioneer. Post auction sales are common, where the highest bidder or an interested party who did not bid agrees a price afterwards, and many unsold lots are placed this way within days. If that does not happen you can enter the property into the next catalogue, usually with a revised guide price and a reserve set more realistically, or you can withdraw the property and take a different route altogether, whether that is an estate agent or a direct sale.

The point to check before all of this is your agreement. Entry fees, marketing costs and withdrawal charges may still be payable on an unsold lot, and some agreements tie you to the auctioneer for a period afterwards, so that a private sale to someone who first saw the property through the auction still attracts commission. Read those clauses before you sign, not afterwards.

Questions to ask an auction company before instructing them

A good auctioneer will answer all of these plainly and put the answers in writing. Any reluctance is itself an answer.

• What are all the fees, including entry, marketing, commission and VAT?
• Is there a no sale, no fee arrangement, and what exactly does it cover?
• What marketing is included, and where will the property be advertised?
• What happens, and what do I owe, if the property does not sell?
• What guide price do you recommend, and how did you arrive at it?
• How is the reserve determined, and can I change it before the sale?
• Which auction method are you using, traditional or conditional?
• What are the buyer's obligations once the hammer falls?
• What are my obligations, and can I withdraw the property?
• When would exchange and completion take place under your conditions?
• How long am I tied to you after the auction if the lot is unsold?

Is selling at auction right for me?

There is no general answer, only the answer for your property and your circumstances.

Auction is worth serious consideration if the property is unmortgageable, unusual or in poor repair, if you want a fixed date and a binding contract, if you can fund the upfront costs and if you can accept the possibility that it does not sell. It is a weaker choice if your property is in good order in a popular area, where an owner occupier is likely to pay more than an investor, or if you cannot afford to spend money on marketing without a guaranteed result, or if you need to know your figure before you commit to anything.

Circumstances matter as much as the building. Separating couples and families dealing with a difficult situation often value a known outcome over a possible extra few thousand pounds, and our pages on selling during a divorce and how our own process works may help you weigh that up. The sensible approach is to get an auction appraisal, an estate agent valuation and a cash offer, then compare the net figures and the risks side by side.

Auction or cash offer?

If you are weighing auction against a direct sale, the most useful thing you can do is put a real number next to each option rather than comparing an auction guide price with a rough idea of what a cash buyer might pay.

House Buying Experts considers properties for direct purchase, in almost any condition, anywhere in England and Wales. We will look at your property, explain how we reached our figure and put it to you in writing. There is no fee, no marketing period and no obligation of any kind. If the auctioneer's appraisal looks better once you have deducted the fees, take it with our blessing. Having both numbers in front of you is simply a better position than having one.