If you’ve been planning to sell through a property auctioneer, you’ll naturally want to receive a great winning bid and enter into a sale contract immediately.
While this is the most common outcome at a property auction, there’s always a chance that your house will fail to sell – or that the auctioneer will reject a potential winning bid.
This will naturally be disappointing – but there are other steps you can take. In this article, the auctioneers at Property Solvers explain what happens if a property doesn’t sell at auction.
Why Your House Didn’t Sell at Auction
There are a few common reasons why a property may not sell at auction. We explore a number of them below.
The Reserve or Guide Price Was Too High
As a seller, you will need to agree on a reserve price with the auctioneer. This figure is kept private and represents the lowest bid you will be willing to accept.
While auction house employees are usually highly experienced in these matters, there’s always the possibility of a mistake. If your reserve price is too high, a lot of bids will be rejected.
You may find that no one is willing to make you the offer you want.
The guide price is determined by the auction house and may be higher or lower than the reserve price. This figure is made public to potential buyers. A guide price that is too high may be off-putting for potential bidders.
In some circumstances, a very low guide price may also prove problematic. After all, it might suggest problems with the property that aren’t immediately discernible.
Remember that the auctioneer will not get paid if the property doesn’t sell. It’s therefore in their best interest to find a workable solution.
There Has Not Been Enough Buyer Interest
Whether they gauge interest by keeping track of viewing requests, general enquiries, applications to view the legal pack or through any other method, an auctioneer may predict that bidding won’t reach suitable levels during the event.
If this is the case, they may withdraw the lot – leaving it unsold.
Bids Have Been Too Few or Too Low
Even if interest levels have been good prior to the auction event, there is always the chance that too few people will bid when the time comes, or that all bids will fall short. As a result, your lot may be withdrawn or simply fail to sell.
There Has Been Insufficient Opportunity for Viewing
If potential buyers have not been able to view the property you are selling, they are highly unlikely to bid. Viewings are an important part of the process when auctioning your property. If there isn’t enough opportunity to see the building “in the flesh”, bidders won’t want to take the risk.
Your Legal Pack is Flawed
Perhaps there is something missing from your property’s legal pack. Alternatively, some of the information may appear incorrect or in some way concerning. If a potential buyer’s solicitor has advised them of a problem regarding the pack, they may well steer clear of your property.
What Happens if a Property Doesn’t Sell at Auction?
UK auction houses reserve the right to withdraw lots if they do not command suitable interest, if bidding does not reach the reserve price or if the seller fails any legal checks. Should this happen, or should the property simply fail to sell, there are certain things you can do.
Relist for Auction With Improvements
You might decide to relist your property at a future auction event, resolving the problems that caused the initial failure.
For example, you may make the effort to be more flexible with viewings, or work on putting together an improved legal pack.
How Much Does it Cost to Sell a House at Auction?
You’ll need to pay a solicitor’s fee, auction administration fees of between 2 and 5% of the property’s sale price and any marketing charges when auctioning your property. For this reason, it’s in your best interests to present your property and auction pack as effectively and diligently as possible. After all, relisting will cost you at least the same amount again.
Accept a Private Offer
Some buyers may try to get a better deal on auction property by approaching the seller of a withdrawn lot after the event and making a lower offer.
You may be wondering “if I fail to sell my house at auction, can I accept this independent offer?”. The answer is yes – if you’re keen to pass the property on to someone else, this option is perfectly viable. Of course, if you still want the sale to meet your reserve price, you can refuse.
Choose a Different Method of Sale
Perhaps auction is simply not the right option for your property. Depending on what you are selling, you may decide to use an estate agency or different auction house when making your next attempt to sell.
Alternatively, if you are in a hurry to give up the property, you might use a fast homebuying service like Property Solvers. We’ll make an up front, no-obligation cash offer worth up to 75% (or more) of your home’s market value. If you accept, we can close in as few as seven days. You’ll have no solicitor fees or estate agency charges to pay.
For further information about our services, or to request a cash offer for your property, contact our team today.