How To Get The Best Price At Auction In The Current Property Market

The whole point of selling at auction is that it achieves (or should achieve) the best price for your property from willing buyers on the day.

But it would be naïve, especially in the current uncertain property market, to expect this happens automatically. In this article we will look at what you can do to increase your chances of getting the best price for your property in an auction sale.

First, is auction right for you?

First of all, consider whether auction is the right sales method for you and your particular property. Consider factors such as speed of sale and likely costs of selling versus likely price achievable.

Choose the right auction

It’s important to bear in mind that not all auctions are the same. It is usually best to choose an auction which already sells similar properties. They are more likely to attract interested buyers.

Consider whether a national or a local auctioneer is most suitable. Perhaps consider the modern method of auction as well as a conventional (or traditional) auction.

Speak to several auction houses before making a decision.

Select suitable guides and reserves

The reserve price is the minimum price at which your property can be sold and is not disclosed to buyers. The guide price is usually used to give buyer’s an indication of your minimum expectations. It is not an actual sale price. Guide prices may be a single figure or a ‘guide range’.

Your auctioneer is best placed to advise on what these figures should be. Although it seems counter-intuitive many will tell you that the lower the reserve the higher the price that may be achieved. Attractive reserves (and thereby guide prices) tend to attract more interest and encourage more competitive bidding.

It is possible to tweak guides and reserves prior to sale day depending on pre-auction interest from buyers. Again, your auctioneer will advise.

Good marketing, and plenty of it

Although speed of sale is often an auction strength try to avoid rushing. The longer your property is exposed to the market pre-sale then the more interested bidders you are likely to attract.

Comprehensive marketing is vital too. Use an auction which doesn’t just list your property in a catalogue but which markets it proactively using methods such as property portals, social media, auction PR, and direct marketing to registered buyers too.

The quality of online listings is particularly important today as many buyers will decide whether or not to bid purely on this information. Make sure that written descriptions are extensive and that there are plenty of photos of your property.

Lastly, you may want to consider the position of your property in the sale. It’s sometimes thought that earlier lots attract more interest and bids than those listed later. Again, auctioneers can advise on this.

Advice from the auctioneers

Gary Murphy, Auctioneer at Allsop, advises sellers: “Not every property is suitable for sale by auction. It is important to ensure that there is competition for the method to succeed. Firms that have experience of selling by private treaty and by auction will usually be able to give the best advice on the most suitable method of disposal.

“The right choice of auctioneers is also key. Pick a firm with strong experience and an extensive national mailing list. The big London auction houses will have good national coverage. Sometimes it is very helpful to have a local firm of joint auctioneers to ensure that regional buyers are targeted efficiently.”

He stresses the importance of setting appropriate guides and reserves: “The most important consideration at auction is getting the reserve price and the guide price right. Setting a modest reserve price enables the auctioneers to quote a modest guide price. This helps create competition and raise the ultimate sale price. Some sellers may fear that a low reserve price will constrain the price achievable. This is simply not true. Indeed, it will usually achieve a much better result.”

And he adds: “Extensive marketing is essential to the success of an auction sale. That should include local and national advertising, PR coverage where appropriate, listing on all major property portals, direct mailing to potential special purchasers, a ‘for sale’ board at the property etc.”

Toby Limbrick, Director, at Network Auctions also tells us that pricing is key to getting the best price: “Achieving top price has nothing to do with the presentation of the property or the date of the auction. It’s all about the reserve price.

“Without fail, the lots that exceed expectations are the ones with the most attractive reserve and guide prices. Clearly not every seller will risk putting a property to auction with a very low reserve price but those who do benefit from huge momentum when multiple buyers make bids.”

He gives an example of how correct pricing can work in the seller’s favour: “A good example of this is a former hostel I recently sold for a housing association. The building was neglected but offered good potential to HMO operators and flat developers. Our advice was that in good order the building would be worth in the region of £600,000-£650,000 and the cost of works were estimated at £100,000-£125,000. Agents had suggested marketing at £600,000 and negotiating down to £550,000. Our recommended reserve price was £350,000.

“At auction we had over 30 registered bidders and the lot was knocked down at £751,000.

“Had this lot been reserved at £500,000 I’m sure it would have sold but there’s no way we’d have created the momentum to drive the eventual selling price up to £751,000.”