When you have a property to sell, selling through an estate agent may be the obvious choice. But there are other selling options available, of which selling at a property auction is one.
In this post we will look at which is the better way to sell your property – by using an estate agent or by using a property auction.
Quick comparison agent -v- auction
First of all let’s look at what selling at auction and selling using an estate agent involve:
* With an estate agent your property is promoted to the market, prospective buyers make their offers and you can choose to sell it to one of them (normally the best offer).
* With an auction sale your property is promoted to the market, prospective buyers make their bids and it sells to anyone who offers the reserve price or more.
So in some ways the basic principle is the same for both agency sales and auction sales. And yet they are very different.
Let’s look more closely at those differences:
Ease of sale agent -v- auction
With an estate agency sale you’ll need to be prepared to deal with, potentially, lots of enquiries and lots of viewings. Not everyone will be serious, or be able to afford your property. You’ll also have to be involved to a certain extent in negotiations, and in choosing the right buyer.
Auction selling is likely to be a bit more straightforward. There’s no offer process or negotiating with buyers. The rise of online auctions means that some buyers won’t even want to view your property.
Speed of sale agent -v- auction
In very general terms an auction sale is likely to be quicker. When your property is entered into an auction you know for certain the day on which it can (but not necessarily will) be sold. Depending on the date of the auction that could be within just a few weeks.
It’s difficult if not impossible to tell how long a sale through an estate agent will take. It could be immediately, or it could take many months. In the recent hot market properties have sold in much less than average time but in a cooler market sale times could increase considerably.
The speed of sale with an auction could be important if, as many expect, the market is cooler this year.
Certainty of sale agent -v- auction
An auction is likely to be a more certain way of selling. With a conventional auction the sale completes legally after (normally) 28 days.
With an estate agency sale, however, the sale cannot be considered final until exchange of contracts and there is no guarantee until that actually happens. And no certainty as to when that actually might be. With an agency sale there is always the risk of the sale falling through, due to a broken chain or other reasons. There is also a risk of gazumping or gazundering. In a cooler market there is probably more chance of an agency sale being disrupted.
Auction selling removes many of these hurdles. That said, there is still no guarantee that you will find a buyer at auction in the first place.
Price achieved agent -v- auction
The best sales price for a property is usually obtained when there is competition between buyers.
An auction is a very good way to create a competitive market. If two or more bidders are interested in your property then the selling price could be pushed well over the reserve and guide prices.
A competitive environment can be created with an estate agency sale too. But that depends on the efforts of the agent to promote your property to as many prospective buyers as possible and in encouraging two or more to make an offer.
An important thing to bear in mind is that many auction buyers are investors looking for a bargain. Those who buy through agents are generally homeowners, who are often willing to stretch their budget for the property they want. So for this reason alone, although both methods can get the best price, on balance most experts will agree that you stand the best chance of getting the best price with an estate agent sale.
Cost of selling agent -v- auction
This all depends on the terms you agree with your chosen estate agent or auction house. With an auction sale it may be possible to shift some or all of the costs onto the buyer which you can’t do with an agency sale. But that might affect the amount they are willing to bid too.
Agent -v- auction – summary
This is a really difficult comparison to make at the end of the day. An estate agent sale is the conventional choice and there are good reasons for that. But selling at auction offers a number of benefits too. It all depends on the priorities that are important to you when selling your property.