If you have ever used auction websites to get rid of your old clothes but what about using the web to auction your house? According to most auctioneers, and former property developers, we should all be doing it because not only does an online auction remove the pain of gazumping, it also ditches the estate agents.
There are many new dedicated property auction websites that aim to combine the benefits of auction and private sales.
The only thing agents are really useful for are their databases of potential buyers. If you list your two-bedroom flat with an estate agent, you are paying them three per cent for them to give you, say, 15 people interested in buying a two-bed flat. But by listing your home on the web, buyers will find you. Estate agents try to make you believe they are working flat out to get the buyer or the seller the best deal. But if the buyer and the seller just got together and spoke directly they would be able to come to an agreement much quicker and not end up paying thousands of pounds commission.
What is more, often sellers could make several thousand pounds more because the price has not already been fixed with the buyer.
These auction sites work by sellers paying a one-off fee plus VAT to register their property. After specifying a hidden reserve price, the seller decides on a guide price, the advert goes live and an auction date is set for several weeks ahead. During this time potential buyers can arrange with the seller any viewings or any surveys or searches they may wish to carry out. Bidders can register free and bid on the auction day. To ensure bidders are genuine, the site requires them to provide several types of ID, including a scan of their passport. Bidders are also required to agree to terms and conditions, which are legally binding, to deter from dropping out of the purchase.
After the auction ends, the process is the same as a private sale and everything is handed over to the lawyer of the buyer and seller. After the buyer has won the auction he pays one per cent of the price to the solicitor of the seller to secure the property for six weeks. During this period the buyer can then arrange additional viewings or surveys if necessary. Once the auction is closed, the price is set. There is no gazumping or gazundering. If the buyer wants to pull out, he forfeits his one per cent deposit. For the seller, if the deal falls through, although it may be disappointing, they will pocket the deposit and start again.
But there are some pitfalls to selling your home yourself, warns Peter Bolton King, chief executive of the National Association of Estate Agents. People are not necessarily good sellers. There is more to selling a house than saying here is the bathroom, here is the kitchen. There is a knack to it. The idea of the online auction all looks very very good but there are a lot of questions sellers and buyers should ask. You are taking a big risk doing it yourself.
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