What happens if a property doesn’t sell at auction? UK Guide
Auctions can be an exciting way to sell properties, but it’s not always smooth sailing. In fact, EIG reports that up to 20% of properties that make it to auction don’t receive a single bid. For sellers, this can be incredibly frustrating and even lead to a period of high stress as they scramble to find alternative ways to sell their property.
At Hammered, we’re no strangers to helping sellers navigate the challenges of auctions gone awry. We’ve seen firsthand the many reasons why properties might fail to sell at auction, and we’re here to tell you that almost all of these reasons are completely avoidable. To familiarise yourself with these read our list of the top reasons why properties don’t sell at auction.
In this article, we’ll explore:
1. What Happens if a Property Doesn’t Sell at Auction
2. Downsides of Your Property Not Selling at Auction
3. How to Sell Your Property if It Doesn’t Sell at Auction
By understanding the pitfalls and preparing accordingly, you can increase your chances of auction success and avoid the frustration of an unsold property.
1. What Happens when a Property Doesn’t Sell at Auction
Let’s explore the three main outcomes when properties fail to sell at auction and the reasons behind each scenario.
- Withdrawn Properties
Why Are Properties Withdrawn from Auction? A property can be withdrawn from the auction by the seller or the auctioneer. This occurs when they believe it’s no longer in their best interest to offer the property for sale. Common reasons for withdrawing a property include:
1. Lack of interest from buyers
2. Legal issues, such as missing documents
3. Changes in the seller’s circumstances, like a family loss or divorce
4. Drama, such as disputes with neighbours, freeholders, the council, or damage to the property
- Postponed Auctions
Postponing an auction is less final than withdrawal, signalling that the property will return to auction in the near future. The two primary reasons for postponement are:
1. Missing legal pack or essential documents: Postponing is preferable to withdrawing because buyers tend to maintain interest in a postponed property.
2. Limited property access: If sellers can’t provide access for viewings during the marketing period, they may postpone to a future auction when access is possible.
- Unsold Properties
An unsold property is one that fails to sell at auction. Different types of unsold properties include:
1. Unsold, last bid £____: The most common scenario, indicating that bids were placed but did not reach the reserve price.
2. Unsold, refer to the auctioneer: This means bids didn’t reach the reserve price, but the auctioneer chooses not to disclose the last bid.
3. Unsold, available at £____: If a property goes unsold, disclosing the desired sale price may help attract potential buyers.
4. Unsold, no bids: This is rare, as auctioneers typically know who’s interested in bidding. It may occur when a seller insists on offering the property for sale, often against the auctioneer’s advice.
Over the last 36 months, approximately 80% of properties have sold at auction. This figure only accounts for properties offered for sale and excludes withdrawn or postponed properties. While not every property sale is successful, understanding the potential outcomes and reasons behind them can help sellers navigate the auction process more effectively.
At Hammered, we’re committed to guiding you through the auction process and helping you make informed decisions. Armed with this knowledge, you can better prepare for potential challenges and increase your chances of a successful property sale.
Next up, here’s a breakdown of costs and fees you might have to pay even if your house fails to sell at auction:
2. Downsides of your property not selling at auction
Selling a property at auction doesn’t have to be expensive. However, if your house doesn’t sell at auction, there will be unavoidable fees and costs related to the process. Some fees are only charged if the property sells, while others must be paid regardless of the outcome.
Auction House Fees Breakdown
- Entry fee
This fee, also known as a marketing fee, is paid to the auctioneers to include your property in their auction. It covers the cost of pictures, floor plans, and listing the property on Rightmove. The typical fee ranges from £500 to £700 and is non-refundable.
- Search pack
When selling a property at auction, most solicitors recommend ordering a search pack, which forms part of the legal pack required to sell your property. This can cost between £300 and £500 and is non-refundable.
- Management pack
If you’re selling a leasehold flat, your solicitors and auctioneers will ask you to obtain a management pack from your freeholder. They will do this for you if requested but will charge a fee ranging from £100 to £300. This is non-refundable.
- Legal pack
You’ll need to hire a solicitor to create the legal pack and carry out the necessary legal work when the property sells. If the property doesn’t sell, you’ll still be responsible for paying the solicitor for their work.
Wasted Time: The Auction Timeline
Auctions can be time-consuming, taking up to 10 weeks of your time. If your property doesn’t sell, you may have to start the process all over again, which can be frustrating.
Post- Auction Challenges: Selling a House that Failed at Auction
If your property fails to sell at auction, it can be more difficult to sell later at a higher price. Potential buyers will be aware that the property didn’t sell and may be hesitant to pay more than the failed auction price.
Withdrawing Your Property from Auction: What to Know
If you decide to withdraw your property from auction, here’s what you can expect:
1. Withdrawal fee
If you choose to withdraw your property against the auctioneer’s advice, they may charge a withdrawal fee, typically around 2% of the reserve price.
2. Marketing fee
Most auctioneers charge an upfront marketing fee, ranging from £300 to £900+VAT. The cost varies depending on the auctioneer and the type of advertisement required for your property in the catalogue.
3. Solicitors’ fees
Your solicitor may charge you for the work they’ve done in creating the legal pack.
4. EPC (Energy Performance Certificate)
Legally required in the UK to sell a property, EPC costs can range from £50 to £500, with residential properties being more affordable than commercial properties.
By partnering with Hammered Auctions, we can help you find the best auctioneer for your property at the right price and with the correct marketing strategy. This significantly reduces the risk of your property not selling at auction. Additionally, we can help minimise the fees and costs you pay if the property doesn’t sell.
3. How to sell your property if it doesn’t sell at auction
If your property didn’t sell at auction, don’t worry – you still have options. We’ve compiled a list of alternative approaches, each with their pros and cons, to help you make an informed decision. (Bear in mind, choosing to work with Hammered from the start will dramatically increase your chances of success in selling your property in the first place.)
- Estate Agents: A Second Chance
Although you may have experienced challenges with estate agents in the past, they can be a viable option if your property doesn’t sell at auction. While the process might take longer than you’d prefer, they can offer your property for sale and help you find a potential buyer.
- Quick Buying Property Company: Fast but Flexible
If you’re looking for a speedy solution, quick buying property companies can offer you a cash price for your property. However, they will likely offer you a discounted price based on their buying position and the rapid transaction. This option is best suited for those who can be flexible on the property’s selling price. If you need a price that is closer to market value this option may not be ideal.
- Private Buyer: The Rare Gem
While uncommon, a private buyer may contact you directly to purchase your property. This could be a neighbor, someone looking to relocate close to family, or even a private investor (like a landlord). Though this approach can be slower and less reliable, it may still lead to a successful sale. Be aware that private buyers may try to reduce their offer last minute, which isn’t the best scenario.
- Auction: A Winning Strategy with Hammered
You might be hesitant to consider another auction, but with Hammered’s guidance, your chances of success increase dramatically. Our team ensures your property is entered into the right auction, marketed effectively, and priced attractively to fetch you the best possible price.
As experts in the field, we offer our knowledge and experience at no additional cost to you.
Psst! 🤫 We’ve got a cosy little corner on our website where we chat all about selling property at auction in the UK. From the ups and downs to those handy insider tips, it’s all in our Ultimate Guide to Selling a House at Auction. Why not pop over, grab a cuppa, and dive into the world of auctions with us?
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