Property can be sold either by private treaty, public auction or by tender. Private treaty sales are recognised as the usual traditional method. Sales by tender are when offers are made usually in a sealed envelope prior to a deadline, perhaps give an impression of "mystery" and very often potential purchasers are deterred because of the nature of the process.
A public auction sale is a popular method of sale in order to achieve the best "open market value".
What are the advantages of selling at auction?
- The whole process, from initial advertising to completion, can be undertaken within eight to ten weeks.
- The fall of the hammer, provided the reserve price is reached, is the contract between the seller and buyer.
- The buyer must sign the contract, available for inspection prior to the sale, immediately after the sale - and pay a deposit (usually 10%). The seller's contract is also signed, and the contracts are exchanged.
- The contract will stipulate the completion date when the balance of the purchase money is paid by the buyer.
- If the buyer fails to complete, the seller then retains the deposit - which would cover the sale expenses.
- The seller must be in a position to buy and sign a contract. There is no chain.
- All surveys should be undertaken prior to the sale.
- Open market value is achieved with competitive bidding. With spirited bidding, the realisation price sometimes exceeds expectations.
- If the property does not sell at the auction, it normally remains on the market by private treaty.
How does the auction process work?
- The property generally requires 4-5 weeks' advertising with prominent, effective advertisements. The type of property dictates the publications in which to advertise. Normally, the local newspapers and websites are adequate.
- The sale contract and conditions of sale are made available for inspection by intending purchasers prior to the sale, at the auctioneers and solicitor's offices. Your solicitor prepares the contract.
- Prospective buyers must have finance arranged prior to the sale and if necessary a survey on the property.
- The buyer must sign the contract immediately after the fall of the hammer - and pay a deposit (usually 10%). The deposit is non-refundable and becomes the property of the seller.
The signing of the contract commits the purchaser to complete the sale on the date fixed for completion. The completion date is when the balance of the purchase money is paid.
Failure to complete can result in penalties. The minimum and usual completion date is 28 days from the date of sale.