How to sell property at auction
Selling Your Property In An Online Auction | BONUS Ep9 - Season 3 (Move iQ Property Podcast)
0:00 / 0:00
Timecodes:
hi i'm phil spencer and welcome to the
move iq
podcast home selling series the only
podcast series
dedicated to help you sell your property
this season is sponsored by go to group
who have a concierge service that can
help you
with all you need from choosing the
right agent
mortgage advisor solicitor surveyor
even removals plus using go-to
online auctions or their committed buyer
service
to sell your home can give you certainty
and peace of mind
we've added a link below so you can
connect with them
enjoy the podcast and i hope you find it
useful
hello everybody thank you for tuning in
once again
to the move iq property podcast it's
season three and i'm delighted to bring
you a bonus episode today
on how to use an online auction to sell
your home
with the demand for a more modern
digital approach to selling property it
is actually an increasingly popular
option for people
selling their homes in the uk so we
wanted to delve a bit deeper
and give you the detail that you need on
how to sell your home in an online
auction
and whether that is an appropriate or
suitable thing so i'm
really pleased to be joined today by
alex willis
who runs the online auction um part of
the go to
group um alex thank you so much for
joining me
i'm i'm really curious to to learn
all about the online auction because
i'll be perfectly honest i don't i don't
have experience on it
um and i'm i'm intrigued to to hear more
and to
see to i guess should we kick off with
how long
the online auction system or ability has
been around
um and how you guys got involved
absolutely so
i feel hi audience um absolute pleasure
to be speaking to you today
um in terms of the online auction space
it has been in operation for around
eight years now
um but we really are seeing it it grow
and develop into
a bit more of a prominent route to sell
um over the last two to three years
so we effectively as a business got
involved in it and and
launched the service in january 2019
and i think whether it's just um
the sort of the the consumer consumers
becoming more aware of it as an offer
offering
or just the market dictating the auction
could actually be a better route to sell
for their situation we are seeing it
take up more and more in the market
effectively now it accounts for probably
three to five percent of transactions
with normal sort of uh
sales that you would see over here so
sort of historically people
think of and i'm not just talking
digital auctions or online auctions i'm
talking
traditional go to the go to the auction
room in the
you know the back of the hotel
historically people have thought
it sports kind of repossessions or
investor-owned properties or
pubs or developments that kind of thing
but that's not really the case any
longer is it
no and you're absolutely right and you
know where
we're coming with the online auction is
we're almost having to to get rid of
some of those misconceptions
that people have with auctions so there
are two routes
or two types of auctions there's the
what's termed
unconditional auction which is what
people might be used to
when they look at or you know when
they're watching homes under the hammer
for example
sorry about that but effectively you
know one day a month
there's a number of properties that are
put up for auction in a room or a
football club
um and people will be able to to bid and
buy within the room
um and within that type of auction it's
uh as soon as the gavel goes down
it's an immediate exchange of contracts
and
um there will be a 20 that 28 day window
to
completion and the buyer will have to
put down 10
to secure the property now with what
we're doing with the the modern method
of auction
it's what's termed as a conditional
auction so with the conditional auction
um there is from the gavel going down
there is a
56-day window to completion um from the
draft contract being received as well
when the capital goes down is it that's
exchange
deposit needs to be transferred no so
well okay
it's not it's not a deposit so upon the
the virtual gavel going down let's call
it yeah
the the winning buyer will have to put
down a non-refundable buyer's premium
will effectively secure them the
property and that
that amount of money falls outside of
what they bought the property for
okay effectively they're financially
committing to the property and seeing it
through from that point
but importantly there is a 56 day window
to completion
okay means that unlike your
unconditional auction where it's
tend to be cash buyers investors and
quite a sort of pigeon whole group of
buyers
the modern method of auction lends
itself to people that come by with a
mortgage
and really opens up the market to more
potential buyers through
routes what kind of a um what kind of a
percentage does the buyer
have to put down so it's usually
a i mean there's there's varying models
out there
okay on on the the the business that
sits behind the auction
so then you know we've heard up to 4.2
percent of the sale price
being a a non-refundable amount that's
put down
so for example a 500 grand auction
you know that can account for maybe 18
000 pounds at the buyer and outside of
what they buy it for
yes with ourselves we operate off a
fixed
um amount and usually depend on
on on the property or the agent that
we're working with that will sit in
between
maybe five thousand pounds plus v80
eight thousand pounds plus v80 is a
fixed cost regardless of property value
yeah
so that that's the buyer committed it's
correct does the seller commit
in any way the seller commits at the
point of them you know we
for example with ourselves we have
obviously educate and we take them
through what the process entails
for them to instruct auction they will
complete um
what's called an authority to auction
contract
which effectively means that they're
signing up to sell their property under
auction conditions
and that generally will be a a 60 or 90
day
soul selling rights contract okay and
which means that
they're committed to to sell through
that method
and effectively any buyer that comes to
purchase the property has to put down
that they
they can't list it another way or sell
it to a
buyer side of auction conditions
effectively okay
so so they're committed contractually so
if they end up within transaction
pulling out and and
reneging the deal because they signed
the contract that amount of money
could sort of be they could be liable
for that
because of that they've reneged on it
yeah
and from the buyers perspective so they
put down a non-refundable
amount um that doesn't go towards the
property
or indeed to the to the owner of the
property
if if there are problems in a survey or
in the title deeds or something what
what what would be the
state then really good point um and
we do have you know the aim of what
we're trying to do is provide commitment
for that seller
so we ultimately want to open it up to a
buyer who is going to commit
to securing that property and completing
on it
but you know if we have a buyer who
you know they want to put a caveat on
the money they're
down then we can obviously entertain
those conversations so generally the two
yes we would enter into would be
if a if they have a survey carried out
and there are serious structural issues
or serious issues with the property
or if they're unable to obtain a
mortgage
on that point then effectively we you
know if that's in the contract upon them
signing the
yeah buying the property then we can
refund the money at that moment
but they can't they can't be asking you
to refund the money if they
decided that the windows are rotten or
that
it needs re-roofing or something because
they could have seen that on the viewing
absolutely so this is very much uh
unless there is a caveat in there this
is very much a
a buyer beware situation effectively
they have a lead-up time to bidding on
that property
so from the point it comes to market
there's a 30-day window
to the end of that first auction okay no
they can view the property they can a
level of due diligence
and really really importantly um upon a
property going into auction
a legal pack is um is ordered and
created up front
upon instruction so therefore a buyer
upon bidding should be able to see a lot
of information about the property
upfront
right they really are going in with
their eyes open
absolutely from that point if they put
down the money to secure the property
and decide they don't want it a few
weeks down the line
for varying reasons then it is a
non-refundable buyer's premium but
that's good for the the seller to know
in the situation that they have got that
committed
and um is it free for the sellers then
so the buyers are actually paying the
fees the agents fees
your fees yes so for um
for the seller again it you know it can
vary dependent on
you know agent to agent or different
situations but effectively from
from ourselves as an auction house point
of view there's
no additional cost to that seller
there's no cost to pay so
that includes the legal path that's
created a good
desktop valuation on every property that
comes over to us so a renewed
understanding of what it's worth in the
market put it on the market for
so that it is a no cost option for them
to property
and what kind of people come to you who
does it suit best do you think as
a seller i think ultimately it's
it's really geared towards motivated
sellers so there is
motivation to move um and there's a
motivation for them to have
speed and security behind that move yeah
so ultimately there are certain types of
sellers that will fit that
well i think increasingly in the market
at the moment it is the certainty that
that is
very difficult to to go out and get and
that has value
absolutely and i think over the last few
months we have seen
the demand for people wanting that speed
and security absolutely
massively so you know whether it was you
know at the moment we are in this point
where
there is a countdown clock to the stamp
duty deadline
so effectively it just wants a quicker
transaction
and to have the security of knowing it's
going to go ahead and
negotiate on the wrong with purchase
then this is a really you know it's a
really good
for them but in terms of the types of
sellers we tend to see that come down
this route
it's generally people that want speed so
it may be that they're
they're relocating at a certain date or
they
move quickly because of you know
financial reasons
be that you know we work with a lot of
people on probate properties
if you have more than one person that is
is it you know it has an interest
property then effectively the reserve
price can be an agreed price that is
sold for and it just cuts out there
yes and then anyone that has a full
through
um and they're coming off the back of
their sail falling through
it's a really good option for them to
mean next time the buyer that they
actually
cure is committed and it's not happen
again so
so those kind of things really lend
itself to auction alongside
you know people are going through a
divorce um high demand property
is a really interesting one because we
actually find people that
have a lot of interest in their property
and therefore they put it into
an online auction platform to actually
have the transparency of the bidding
and who ultimately wins that bid puts
down the
commitment yeah you know they don't get
all that interest for for no reason when
they pull out or seven is down the line
be very exciting because it is a very
exciting any auction is exciting and
people do get
kind of tense about i've spent a bit of
time um in australia my wife's from
australia
and in the different states in australia
sell houses in different
ways but in victoria it is an auction
outside the house on a saturday morning
and the neighbors gather around and the
auction is a
it's a piece of theater it's tell you
what because i could see a tv show with
your name on tried alex
i've tried i've actually developed the
idea and we got quite close
of actually doing it live channel 4
wanted to talk we're
actually talking about doing live
auctions and i was going to try and do
four a night
and i bought myself in between it was
yeah that would have been amazing
i know i know a lot of people that have
worked in the australian market and
in some states i mean it's the
predominant way to sell so
you know we we know it works yeah and
people like it because
it's transparent it is quick it it
um yeah to watch i've absolutely loved
it
but i think i think just for myself you
know having bought a couple of
properties
the biggest thing is just the worry the
worry of what's going to happen
pull out is am i going to get it all of
that kind of
stuff that goes through your head so
accuracy that something like this can
bring
might mean that people sleep a little
bit easier at night
but in terms of the buyers though so you
the the banks are
are asking for ever um increasing
amounts of cash deposit so the
buyers cash is under under pressure if
they're needing to um
to pay the online auction fee out of
cash
that and surely that also reduces their
affordability on the mortgage um
i mean it's i i see your point and it's
a very good point
i mean generally with with with the
auction
will set because the vendors are or the
sellers sorry are motivated
then generally we're going to set
pricing um at a level that's there to
generate interest
so effectively we're setting that buffer
for you know the the buyer's fee
initially and obviously if there is
enough interest then that can
is what takes the value up and yeah and
that's when we get the the higher price
for the seller
you mentioned it suits it suits a vendor
on a house where there's high demand i
can see that because if
you've only got a couple of people
interested in in your house
and only one of them has got enough cash
deposit
to in order to pay the fee um
then i would question if as a vendor are
you actually maximizing the
the value of your major asset absolutely
and it's a case of
it's almost like um sense checking the
buyers that are
interested in your property yes you know
you're completely right with saying that
um i i think the high demand side of
things is i mean
we um we sort of have
set up a sister service to effectively
off the back of what we're doing with
the online auctions which is something
called a committed buyer service
okay almost to come off the back of
a lot of the benefits that auctions
brings but almost bring
a different terminology to it to make
the benefits more acceptable to it to
some sellers
but ultimately still operate off the
fact that the legal packs done up front
a buyer will put down a non-refundable
reservation fee but what it means is
that the the property could be marketed
at a more
a sort of more acceptable market value
but ultimately a buyer that does commit
to it is still putting down that refund
non-refundable deposit so there's a lot
of similarities but the terminology
works better for some people
okay there is that education about yes
auction and
any property and auction property yeah
yeah but we we are working in a more
digital age now than ever before and
i guess what's been happening over the
last six or nine months has
sped that up as well absolutely more
accustomed to it they're more are
absolutely and i think you know again
if you were to take the word auction out
of it the actual
process is you know is so in line with
the the modern world and it will only
become more like that as
as people get to buying and selling
through that route for me we are
seeing more and more of those high
demand properties coming to us from
from off because of the fact that it's
just filtering out that interest and
meaning that when we
that interested party can they commit to
it and can we have peace of mind knowing
that
they're going to complete on that
property and with your 56 days i mean i
don't know how
how your competitors work it's 56 days
of fairly standard because because that
seems like a
good amount of time to enable people to
sort their finances out et cetera
absolutely so um the 56 day window kicks
in from the draft contract being
received
and you know it it is pretty standard
practice for the online auction space to
operate operate off those time scales
but the idea is to give that time for
mortgage buyers to
to obviously be in a position to
purchase and see that transaction
through
um so yeah it's pretty across the board
so
a lot of your challenge i suppose as a
business is actually about getting out
there and educating both buyers and
sellers
that this is a workable option it's a
modern option but it is a workable
option
for both sides absolutely and i think
there's always going to be that you know
that that constant education piece just
to make people aware of
it entails and the benefits it can give
give them
um but you know we there there is more
spotlight being put on it so i think
we will get there yeah i think for
certainly
you know it works in any market so on
high demand types of properties it can
work really well when there is that
interest and you know the market is is
good lots of viewing interest to filter
out
the the right for that property but also
if there is a point where
the market dips or you know the economy
dips then really
we can help people get sold and we can
ultimately
get
it strikes a chord because of the speed
and the certainty it's not all about the
money it's about
in in this market i really believe speed
and certainty has quite a large
financial value
and there's so many reasons why that
that's important so i think you're
completely right so
the four main benefits that we really
talk about when we talk about online
auction is
the security that we've covered off um
the low cost element comes about from
the fact that someone can sell their
property for no cost
yes of course free option for that
seller and then
value just comes around from the fact
that we will set
a starting price that will be visible on
you know the the portal is an online um
and there'll be a reserve price that's
agreed between
ourselves as the auction house and the
seller yeah and the point that
if it gets to that point then they've
agreed to sell for that property but
the psychology with auction is with a
starting price the only way is up
so how much is that market going to bid
up to and what are they going to say
that that property is worth in this
market
whereas i suppose if someone puts their
property on the the normal private
treaty market for
350 000 pounds people will often try and
see if they can get a deal or
cut it so it is it's quite a nice
different change of psychology
with that bidding process let's use that
as an example if if a house was worth
350 000 pounds
you would you would list it at
so that would be the reserve price you
would list it out to
325 or 30 000 and then it's up
from that but as soon as it hits over
350
it's going to be solved so so generally
we're working with
people that want to get more interest in
their property and they ultimately want
to sell for
a really compelling reason so often the
pricing we set will will fall just under
what it might be on the market for
currently
okay so ultimately you know we work with
people that might be bringing their
property new to market
um and we'll set pricing in line with
the fact that it's new it's fresh and
people
might be interested nearer to the market
rate but we also work with a lot of
people that might have been on the
market for
three months two three months they're
not getting the interest
they're coming to the end of their
estate agency contract
and therefore it might be that a change
of marketing strategy might help them
get sold
yeah so therefore we work with a lot of
sellers that have been on the market
with you know an agent it's not working
and therefore we can then help them
the price and try and get a bit more
interest in it but usually the pricing
you know as i said before we have a risk
chartered surveyor that will do a
desktop valuation on every
every sort of customer that we contact
um so on their property
and therefore off the back of that the
starting price on a property will
usually fall
around 15 below the market what it's on
the market for
so i'm trying to work out a figure that
i can do some clean maths on there but
no don't worry
um but and the result the reserve price
will fall ten percent
above that so obviously lower to stoke
the interest
but obviously with the nature of the
bidding process that's when we take it
up and above where they were maybe
before
have you got any um sort of examples
that you could talk me through
well it's worked particularly well
absolutely so
i'll always remember the good news
stories really well of course but
there was a lovely lady selling her
property in derbyshire
um we agreed that um the
we degreed a starting price of 65 000
pounds
with a reserve price of 70 000 pounds
and effectively she would have been
happy to obviously take 70 000 pounds
now we had a buyer that ended up
you set the auction for 30 days from
then 30 days in advance to give people
the time to view it download the legal
pack and put
everything um but the buyer upon our
contact with them said that they were
they were only going to be
maximizing out at 75 000 pounds
maximum bid that they would go up to so
they put in their 75 000 pounds
left it a few days and then someone else
came in and were interested in the
property
all of a sudden with a date ago we had a
bit of a bidding war between those two
and in the end the uh the lady got 88
000 pounds for her property
and therefore eighteen thousand pounds
above she would have accepted so she
would
be delighted in tears on the phone um
i mean we we've had it an example really
recently
on a property in walsall where before um
it was in february before covid kicked
in there was 147 viewers that attended
an open house
and again the winning buyer paid 125 000
pounds for that property
yeah seven weeks into their transaction
pulled out
so the the seller would have been
devastated there was that much interest
and they had to be you know
it was the one that let them down what
happened was that then came to auction
with us
we ended up within the final uh 90
seconds of the auction we had
uh 33 bids from a number of different
bidders
the end the it was sold for 133 000
pounds plus the buyer's fee great result
secured 8 000 pounds more than they
originally got
with security of that that buyer that's
going to complete on that property
great result to talk me through so the
end of an auction so
it is a time there is a time limit isn't
it
there's um so when when someone signs up
to auction they sign that 90-day
self-selling rights contract
so that allows you so as a buyer so i'm
interested in
i'm wanting that flat and there's 15
other people bidding
yeah how am i going to how am i going to
get in there if
if there's a clock ticking yep so
there's there's a clock ticking
and you know you for those that have
used ebay
you know there is some similarity with
how that that sort of dashboard looks
and works but
effectively there is a countdown clock
it will tell you
how long until the the auction finishes
so we do see the great thing is and we
talk about the transparency is
we can see how many people have bid but
we can also see how many people
are actively watching that property and
i as a consumer potential purchase
can i see how many people are watching
it yes so you can you can see how many
people are
uh uh or what so the the the psychology
is that you know
as much as you've put in an offer you
probably know that there's seven
eight nine people that are still
interested so as the clock ticks down
and obviously an offer goes in and
that's when we start seeing a lot more
activity
as it gets closer to the end of the
clock so um if
for example it gets into the last 60
seconds of the auction
and a bid goes in right the clock will
extend again
for a further 60 seconds and continue
now
until there's a 60-second block without
a further offer
i see well is that that it's also fair
yeah and i think the idea is we're
trying to
deliver a really good result in terms of
what that seller gets for their property
so to cut it off when other people were
willing to maybe offer
you know again that extending clock is
the right thing to do got it
so you know again because it gives
everyone a chance to actually have a
little thing because there's a little
rather a lot of money on the team
absolutely and it delivers it delivers
such an exciting experience
it's absolutely fantastic but um we we
we have actually probably 40 percent of
the auction sales that we've had
have gone down to the end of the clock
yeah but also we do actually
have buyers that come forward earlier in
the process so
you know say that for example it's
marketed for 30 days
but they go to a viewing on the fifth
day of the auction
within that marketing period and they
want to put in an offer
then it can be that that seller because
of the motivation
is happy to accept an offer early
effectively close the auction and start
that
legal process a bit sooner so we do get
a lot of properties that sell
prior to the end of the auction but
again you know if sellers see that
interest in the property
we might wait and see where it gets to
and is it um in terms of the business of
go to
are you using local high street agents
to do the viewings or do they come to
you how does that
kind of tend to take shape yeah so we
effectively
um we manage the auction process and we
run the technology so
we we run the technology that sits
behind the auction and the countdown
clock and the marketing
property on on that platform um and then
we have a a really
experienced and informative team that
sit in our office
um that talk the the clients the sellers
and the buyers through the process
and manage that ongoing process through
to the the end production and beyond
um but we um we
basically partner with high street
agents
um who who will obviously you know
introduce us to their sellers that they
might be suitable for auction as well
and vice versa so effectively they will
market it on their
portals their portal accounts as well as
carry out the viewings
um on behalf of ourselves as the auction
house
i think it's a really really interesting
model um
uh could i just finish up if i may and
ask you alex if you could give
just a couple of tips of how how best
to to use the system as a buyer and how
best to use the system
as a seller if you were doing yourself
any any particular golden nuggets
uh so i mean if if i was a seller for
example
then effectively i'm an advantage
knowing the benefits and what
results it can deliver i would i would
look at
um you know the fact that i you know
what what is my motivation if i'm
motivated to move then i can enter into
a process that effectively allows me to
get
a quicker transaction and ultimately
secure a buyer that's going to commit to
me my property and give me the
opportunity to go and buy my next
property
head free with peace of mind so you know
the great thing
and and one of the just clear benefits
is is having that legal pack created up
front as well to mean that transaction
can move quicker so
as a no cost option yes it's for me as a
seller
i would i would definitely enter into
that process um
buyer's perspective if if they were to
go on our website and and you you can
see
initially the the properties that they
can get hold of
are are attractively priced
it could be that they can get themselves
say a good deal
um in terms of what they're buying but
but again they're entering a process as
well with a motivated seller
yes so effectively they're going through
the same journey of as much as they're
committing to it
they want property then effectively
committing to it is
is something that they they should do um
but they're entering into it with a
motivated seller at the same time
they're going to get to completion as
well and i think
one thing that's actually just come out
uh in in the press within
the industry press within the last 24
hours is that there was a study that
showed over the last over last year
um pop property sale fall throughs as
cost sellers 607.5 million pounds
yeah all of that yeah so so effectively
out of nearly a million transactions
that did go through there were 225
000 fall throughs with private treaty
you might enter into a
process where there's a one in three
chance of a fall through
whereas with online auction there's less
than a four percent chance of fall
through so it's just
you know it's that i added to which it's
all the sleepless nights
absolutely absolutely no one wants any
more of them do they
no um that's really really interesting
alex
um i wish you all the best of luck i
think it's um we all need a bit of
certainty and speed at the moment and
you're certainly delivering it at go to
so keep on doing it
very nice to talk to you thank you thank
you very much phil pleasure to speak to
[Music]
you
