Introduction
Hi!
Congratulations on taking the first step towards selling your home via auction!
You’re due to be speaking with our recommended auction house shortly, but I know auctions are new to most sellers…
So I wanted to provide a little extra help to make sure you get the most out of your call with them.
This download is designed to empower you with the right questions to help gather the essential information you need to make an informed auction decision.
(We’ve included a one-page cheat-sheet too, so you’ve got all the questions in one place).
How to use this document
You don’t need to ask the auction house every question we’ve suggested…
Just browse through them and see which seems most relevant for you. And don’t forget to have this in a handy place when you chat with them!
The questions come under 3 main categories:
- Price. Discover how much you’ll end up with once you’ve sold the property. (The expected sale price, minus the fees).
- Certainty. Learn how certain the auction house is that they’ll successfully sell your property.
- Process. Build an understanding of the process, what the auction house will do, what you’ll need to do, how long it’ll take etc.
So after your call, you’ll know: What’s going to happen, how long it’ll take, how likely you are to have a successful sale, and how much you may end up with at the end of it.
Sound good?
Let’s get into the questions!
1. Questions About Price
Your Objective:
Discover how much you’ll get by selling at auction, and how much you’ll pay in fees.
Auction Pricing Basics:
Auction pricing is different from estate agent pricing, and it can seem a little confusing on the surface. Let’s quickly eliminate that confusion in the next 90 seconds!
There are two different figures you’ll talk about when it comes to price:
- the Guide Price, and
- the Reserve Price.
What is a Reserve Price?
The reserve price is the most important of the two.
It’s the minimum price the property can sell for in the auction.
Reserve Price Example
Imagine you set a reserve price of £250,000...
If the highest bid is only £249,000, the property doesn’t sell. It hasn’t “met its reserve”...
BUT if the bidding reaches or exceeds £250,000, you get whatever the highest bid is.
So that’s the reserve price.
Tip: Most people who sell by auction want certainty, so before you speak with the auction house have a think about the lowest price you’d be happy walking away with.
What is a Guide Price?
The Guide Price is simply the marketing price of the property. It’s what the buyers will see.
The idea is that you want to set the lowest guide price you possibly can.
Why?
- A low guide price makes the property look more attractive...
- This generates more interest.
- More interest means more bidders...
- and more bidders leads to more competition.
- More competition ultimately leads to a higher selling price.
That’s how auction pricing strategy works.
It’s one of the secrets behind how auctions are able to achieve sales much more quickly than estate agents, and still at a reasonable selling price.
How is the Guide Price set?
So if a lower guide price is better, how low are you allowed to set it?
By law, it can be up to 10% lower than the reserve price.
Here's an example.
Guide Price Example:
Imagine the lowest price you’re happy walking away with is £250,000. This will be your reserve price.
Then the guide price will usually then be 10% lower than this, at £225,000…
So your property will be advertised with “Guide Price £225,000”.
With the basics of auction pricing all covered, let’s get into the questions.
1. Questions About Price
- How much will I get by selling at auction?
(They’ll talk rough figures with you first, and then do a full auction valuation for you). - How much will I pay in fees?
(You want these broken down into up-front fees, and fees on completion. Remember to ask them to include your legal fees too). - How do you value my property?
(How do they actually determine the recommended guide price and reserve price for you?)
Once you’ve got your answers to these questions, you’ll know how this auction sale will stack up for you financially.
If the numbers feel like they could work for you, you’ll want to know how likely you are to get a buyer.
So let’s move on to the next section!
2. Questions about Auction Success Rates
Your Objective:
Find out how good a fit your property is for auction, and how likely you are to get a buyer.
About Auction Success Rates:
Unfortunately, not all properties sell successfully.
For example, estate agents only sell 51% of the properties they take on!
Auctions have a much higher success rate thankfully. On average, nearly 80% of auction properties sell successfully.
TIP: There are some simple things you can do to improve your chances even further, which I’ll email you about separately.
On your auction call, you want to find out how confident the auction house is in finding you a buyer.
Some properties simply perform much better than others in auction. It can come down to location, price bracket, condition, potential, and all sorts of other things.
Based on your quiz responses, you've already highlighted a few things that make you a good fit for auction. But the auction house will get into much more detail with you.
They’ll look at everything and tell you how certain they are that auction’s right for your property.
Let’s get into the questions.
2. Questions About Success Rate
- What is your success rate for selling properties similar to mine?
(Remember, estate agents only have a 51% success rate) - Have you sold any similar properties recently?
(Ask them to email you a link if so) - How many potential buyers do you expect to end up bidding?
(While more buyers are always better, you only need a couple to spark a bidding war) - What type of buyers do they expect?
(Developers? Investors? Owner-Occupiers?) - What can you do to improve your chances of selling?
(Clearing the property, having it tidy, providing detailed information on any aspects) - What happens if my property doesn't sell at auction?
(They’ll usually get you straight into the next auction, and give some advice based on how the first went).
So hopefully by now you know how much you’ll get when selling by auction, and how likely your property is to sell.
But most people are interested to learn how the auction process works before they decide to move ahead…
So let’s get into the final section.
3. Questions About The Auction Process
Your Objective:
Understand the auction process. What will your auction house do, what will you need to do, how long will it take, and so on.
The good thing about auctions:
Auction is a simpler process than selling through estate agents in many ways.
And because the deadlines are all set out in advance (such as the auction date, completion date and so on), things seem to happen almost “automatically” with auction sales.
This is one of the reasons buyers and sellers love auctions. They’re faster and much easier.
Let’s get into some of the questions you can ask to learn how the process unfolds.
3. Questions About How Auctions Work
- How long will the entire auction process take for me, from listing to completion?
- When is the next auction event you’d put my property into?
- What do I need to do if I sign up?
- What are the terms and conditions of the contract I sign?
- How will my property be marketed and promoted?
- How will viewings be conducted?
- What will happen on auction day?
- Do you have a solicitor you can recommend for me?
(I usually suggest using the auction house’s recommended solicitor. It means they’ll be able to do a lot of the chasing for you, and will usually just ensure a smoother process).
One of the reasons we recommend the auction houses we do is because they’ll take the time to answer these questions for you.
They want you to be comfortable with the decision you’re making, and ready for what comes next.
So take all the time you need to build your understanding of the process.
TIP: If you want to learn more about the process before your call, I’ve got a chunky auction guide for you here: How To Auction A House: Your 15-Step Guide To Success.
If you want to learn more about the process before your call, I’ve got a chunky auction guide for you here: How To Auction A House: Your 15-Step Guide To Success.
The Auction Questions Cheat-Sheet
All your auction questions in one place. Feel free to download the PDF, print this, highlight the questions you really want to ask, or
Questions About Price
- How much will I get by selling at auction?
(They’ll talk rough figures with you first, and then do a full auction valuation for you). - How much will I pay in fees?
(You want these broken down into up-front fees, and fees on completion. Remember to ask them to include your legal fees too). - How do you value my property?
(How do they actually determine the recommended guide price and reserve price for you?)
Questions About Auction Success Rate
- What is your success rate for selling properties similar to mine?
(Remember, estate agents only have a 51% success rate) - Have you sold any similar properties recently?
(Ask them to email you a link if so) - How many potential buyers do you expect to end up bidding?
(While more buyers are always better, you only need a couple to spark a bidding war) - What type of buyers do they expect?
(Developers? Investors? Owner-Occupiers?) - What can you do to improve your chances of selling?
(Clearing the property, having it tidy, providing detailed information on any aspects) - What happens if my property doesn't sell at auction?
(They’ll usually get you straight into the next auction, and give some advice based on how the first went).
Questions About the Auction Process
- How long will the entire auction process take for me, from listing to completion?
- When is the next auction event you’d put my property into?
- What do I need to do if I sign up?
- What are the terms and conditions of the contract I sign?
- How will my property be marketed and promoted?
- How will viewings be conducted?
- What will happen on auction day?
- Do you have a solicitor you can recommend for me?