Property auction success: tips for buyers and sellers

Guide to property auctions

Success in the unpredictable world of property auctions is not guaranteed, but there are certain things buyers and sellers can do to increase their chances of achieving the best possible outcome. Whether you’re a first-time buyer looking to get your foot on the property ladder or a seller wanting to achieve a great price, both sides need to adopt the right strategies to be successful at this complicated game of cat and mouse.

Why property auctions can be a win-win for buyers and sellers

Property auctions used to be the preserve of professional investors, but now that’s changing. The lure’s not hard to see. For buyers, there’s no chance of being gazumped, you get the simplicity of cutting out estate agents and you can save on fees. 

Auctions also make sense for many sellers. They’re a fast route to market if you’re looking for a quick sale. They’re also a good fit for houses with potential but which may have a difficult time on the open market. At auction, there’s a ready audience for all kinds of properties, including those looking for a ‘fixer-upper’, buy-to-let investors and wealthy buyers in search of a project.

However, there can be pitfalls for both sides. Sellers may not necessarily get the price they’re looking for, while buyers could be worried about taking on a house with too many issues. Success for buyers and sellers depends on how you approach it.

How can buyers get success at property auctions?

1) Be prepared

Buyers must do as much due diligence as possible. You should visit the property to get an idea of the scale of any problems, such as dry rot and structural damage. You should also find out whether there are any legal issues with land use or concerns about the neighbourhood.

A good solicitor will also come in handy. There will be a lot of legal documentation to get through once you express an interest in a property. This may include legal covenants and obligations which can impact the property’s value.

2) Get your finances in order

Whatever your financial arrangements are, it’s important that you are 100% clear about them well in advance of the auction. You require proof of finance in order to register to bid, so you must sort these out well in advance.

If you are relying on funding – such as a mortgage – to help with your purchase, you need to ensure that it has been approved in advance.

You should also make sure you are aware and understand of all the additional charges that might apply, most of which will be detailed in the legal pack. 

3) Set an ideal and maximum price

You should have an ideal and a maximum price in mind. If you get the property for somewhere near your ideal price then that’s a job well done. If the bidding goes close to your maximum, make sure you don’t exceed it.  

4) Understand that success is not always winning the property

Property auction success is not about buying a property at any price. It might not feel like it, but success is also appreciating when the price is over your limit and walking away. Getting this mindset right can help you avoid a potential money trap so you can bid on other properties another day.     

How can sellers be successful at auction?

1) Properties are more likely to sell

One positive thing in your favour is that selling a property at auction has a higher overall success rate than selling via an estate agent. The most recent industry figures suggest that 71% of the properties listed at auction sell, compared to 51% of those listed with an estate agent. Sales are also less likely to fall through at auction because the highest bidder is legally bound to proceed with the purchase. 

2) Set the right price

Property auctions set prices a lot differently from estate agents. While estate agents tend to set a high price with the expectation that it’s likely to be negotiated down, auctioneers price properties keenly to attract more interest, which drives the price up. 

For some sellers, setting a lower auction price can feel like a risk. However, it’s usually best to follow the auctioneer’s advice, as setting too high a price may mean you don’t sell the property at all. Alternatively, you may only attract one bidder so there’ll be no competition to push up the price.   

3) Present the property well

Property buyers at auction generally have a higher risk tolerance than ordinary home buyers, but you should still take steps to make your property as attractive as possible. It’s even worth spending a small amount to improve the property’s condition, as the more attractive it is, the more bidders you’ll have and the higher the price will go. This is particularly true if your target market are owner-occupiers, such as first-time buyers and young families.

Presentation is less important if you have a problem property that’ll likely be bought by an investor. They’ll want to add as much value to the property as possible, so the more they have to do, the better. However, it’s still worth removing any rubbish and clutter.   

Giving you the best chance of success

Property auctions offer benefits for all sides, which is why buyers and sellers are turning to this option in increasing numbers. For both, the secret to success is to do your homework, approach it in the right way and choose the best auctioneers.

At Eddisons, we’re one of the UK’s leading online property auctioneers. We provide expert and impartial advice to buyers and sellers and have one of the highest success rates of any online auction house. Find out more about our property auctions and get in touch for a free, no-obligation auction appraisal.