If you want to sell your home in a way that is faster and helps avoid those stressful property chains, you should consider selling your home through an online auction.
Online auctions are the modern method of auctioning your home. It has recently started becoming more popular. This article will take you through some advantages and disadvantages of selling your home through an online auction.
How to sell your home through online auction?
Find an online auction
You will find a lot of online property auction sites from a quick online search. Usually, estate agents promote online auction sites themselves.
Conditional and unconditional auctions
Conditional auctions are different from unconditional auctions.
With unconditional auctions, exchange of contracts occurs at fall of the hammer. The sale usually has to be completed within 28 days after that.
In conditional auctions, if the reserve price has been achieved, then at the close of the auction the highest bidder has to pay a non-refundable reservation fee to secure him or herself the option to exchange the contracts. After that, the buyer has 28 days to exchange contracts and then additional 28 days to complete the sale. Online auctions are usually conditional auctions.
You may want to read up on completion to get a better understanding of the residential property conveyancing process.
Property sale
You will have to discuss matters relating to the sale of your home with the online auctioneer. It would be best if you asked them to provide you with a valuation of your home. This will be an estimate they feel your home may go for in the online auction.
Guide price and reserve price
Ask your online auctioneer to discuss the guide price and reserve price with you. The guide price is only an indication of the lowest amount you will be expecting to be bided. It is different from reserve price. If you get an offer that matches your reserve price, your property will be sold once the virtual hammer falls.
Cost of online auction
You should discuss with the auctioneer regarding the fees you will be charged. You may have to pay for things such as an entry fee and buyer’s pack fee. Usually, in online auctions, the buyers are mostly burdened to meet the cost.
Listing of property
Once you’ve put your home for online auction, you home will remain on a list for a specific period, usually 30 days but can also be less. After this period, if an offer has been made, which reaches your reserve price, your home will go to the highest bidder.
What are the advantages of selling a property through online auction?
In regular auctions, the seller has to bear the majority of the cost associated with auctions. However, with online auctions, it is the buyer which bears the majority of the cost.
- Online auctions are faster than regular auctions. This is because you do not have to wait for the next physical auction, which could be a month away. You could put up your house for auction today if you wanted.
- As the auction will take place online, a lot more people can potentially participate in it. The more bidders present, the more likely it is that you can achieve a better sale price.
- Similar to physical auctions, once your home is sold at the online auction, the sale becomes final. There is no chance of gazundering or the sale falling through.
- Online auctions have fixed dates for exchange of contracts and completion.
What are the disadvantages of selling a property through online auction?
- If the auction does not get competitive, where bidders are competing to secure the lot, you will not get an excellent sale price.
- Online auctions are relatively new. Therefore, if your property has not been appropriately marketed, fewer people will participate in the auction. In other words, you will not be able to achieve a good sale price.
- You will probably be charged administrative fees by the auction house or the estate agent.
- While the buyer has to pay the reservation fee, most buyers will try to work the reservation fee into the total amount they are willing to or can pay. So the buyer may be burdened with the majority of the cost, but you will be losing out as well.