Unsold Auction Property
When the auctioneer’s hammer comes down and no bids have been made, the property is labelled as “unsold at auction”. These unsold auction lots offer distinct opportunities for engaging with motivated sellers, the potential for negotiation, and the availability of historical information to simplify due diligence for potential buyers. The auctioneer will ask any interested parties to leave their details before the end of the auction.
As a result, a sale could be made under auction conditions, before the close of trading.
In this helpful article, we talk about the ramifications of unsold auction property in the UK from the point of view of both the vendor and the buyer.
We consider the reasons why a house might not be sold at auction and what the vendor’s alternatives are.
Why Are Some Properties Unsold At Auction?
It is estimated that on average 18-20% of properties remain unsold at the end of a property auction in the UK. This can often be attributed to both the guide price and the reserve price being unrealistic or subject to change up to and including the day of the auction.
There are four common reasons why this happens:
- Unrealistic pricing of the property
- The lack of a property legal pack
- The inability to view the property
- The condition of the property being sold
Let’s look at these reasons in more detail and explain why some lots are classed as unsold auction property.
Unrealistic Property Pricing and Reserve Price
It is very important that the vendor chooses the right guide price for the property or reserve price during the preparatory stage to ensure it aligns with the acceptable sale price. Lower prices are often used by auctioneers as a way to generate interest in the property and is a key aspect of the marketing procedure.
The guide price is often presented as a maximum price range within which the acceptable sale price would fall.
An attractive low price property leads to more prospective buyers taking part in the bidding process which in turn drives up the price. If the guide price is too high, there will be no bidders which means the property is more likely to remain unsold at auction.
The Lack Of A Property Pack
Property auctions are a classic example of ‘buyers, be aware’ in that if there is something wrong with the property, the buyer cannot later bring a court action against the vendor for non-disclosure of crucial information.
For that reason, the non-availability of a property legal pack represents a very serious reason for the auction property to remain unsold. Buyers can visit the auction house’s website to access the property pack and other essential information.
The Property Is In Bad Condition
Sometimes the course of a property auction is dictated by who is in attendance and the kinds of properties they are likely to buy.
At certain property auctions in the UK, many of the buyers may be looking for a house which they can move into with little or no renovation work to the property. If a particular property is in particularly bad condition, such as with a run-down house for sale or even, in some cases, a completely abandoned house, then the property may remain completely unsold at auction.
This has happened on a number of occasions with completely derelict properties or, in some cases, if it is a very unusual property for sale.
Inability To View The Property
A final reason for an unsold auction property is that buyers have not had the opportunity to inspect the property. The provisional reserve range can be adjusted based on the interest shown during the marketing period.
Although looking through the property pack gives buyers an idea of the dimensions and specifications of the property, it is not the same as viewing the property in person.
Buying a home is a very personal experience and involves the emotions. Homeowners often say things like they ‘fell in love’ with the house at first sight.
Apart from this emotional aspect to home buying, a viewing can also give buyers the chance to pinpoint any problems with the auction property such as the lack of natural light, noise levels or even the neighbourhood itself.
None of these aspects can be read in a report.
What happens if a property is unsold at auction?
If a property remains unsold at auction, the auctioneer may facilitate negotiations between the seller and any interested parties to secure a sale post-auction. This process allows for potential buyers to submit offers directly to the auction house, providing another opportunity to purchase the property even after the auction has concluded. Unsold auction property purchasing involves negotiating directly with the auction house after the auction has concluded.
Why do some properties not sell at auction?
Properties may not sell at auction primarily due to three factors: over-optimistic pricing that exceeds the seller’s minimum acceptable price deterring bidders, the absence of a comprehensive legal pack causing uncertainty, and restricted access preventing potential buyers from viewing the property. These issues can significantly impact buyer interest and confidence.
Can I still bid on unsold auction property lots?
You can still bid on unsold lots at property auctions. After the auction, interested buyers can approach the auction house to make an offer on properties that did not sell during the auction event. This provides an opportunity to purchase at potentially advantageous terms.
How do I buy unsold auction property?
To purchase unsold auction property, first contact the auction house for details on available lots. Review property information and legal documents, arrange a viewing if possible, and then submit an offer via the auction house. Ensure you have financing in place and complete the legal process with a solicitor to finalise the purchase.
Buyers should be aware of additional non optional fees that must be paid in addition to the sales price.
Are Unsold Auction Lots A Bargain For Buyers?
It’s possible that a property which fails to sell at auction is a real bargain for a potential buyer.
If no bids are made on the property, the auctioneer will reveal the reserve price. This is a confidential piece of information which is only known beforehand by the vendor and auctioneer and is generally up to 10% cheaper than the guide price. However, buyers should also consider additional non-optional fees and costs that will be added to the sales price.
As long as the reserve price is met, the auctioneer is authorised to sell the property at the close of the day. These situations are where savvy buyers acquire some of the cheapest property in the UK.
You should avoid buying an unsold auction property which you have not viewed or with no information pack. If you later find it has a structural or other issue, you – the new owner – will be liable for putting it right.
Sometimes a property may not sell at auction if the right buyers are not present. This can be put down to bad advertising or promotion of the property or sometimes just bad luck. If the bidders are not there, the property may not reach the guide price and therefore remain unsold at the property auction.
How Can I Find Unsold Auction Property Near Me?
If you are wondering “how can I find unsold auction property near me?” – the answer is simple: Register with a property auction house in your area of interest.
Ideally you will attend the property auction in person, take notes and observe any houses which do not sell. However, if you register with a number of auction houses, you can explain to them you are specifically interested in these types of properties.
If the auction house does have an unsold property on it’s books after an auction, they will notify any interested parties. Buyers should also consider optional additional fees when budgeting for the purchase.
What Can I Do If My Property Does Not Sell At Auction?
Once the auction is over, your property will continue to be featured on the auctioneer’s website but will be listed as ‘unsold’ and the reserve price will be revealed. It is quite possible that you will receive a bid at this price in the weeks after the property auction. To attract more bidders, the guide price can be presented as a single price figure within a range, where the minimum acceptable price would fall.
Potential buyers might have needed extra time to research the property or to get their financing in place. If a late sale does not happen, you have a number of options about what to do next, including:
- Re-auction the property: If your property remains unsold at the close of the auction, you could relist it for sale at a subsequent property auction. Before doing so, re-evaluate the guide price and ensure that potential buyers have access to the legal pack and can view the property.
- Sell via an estate agent: It might be possible that your unsold auction property is more suitable to be marketed through an estate agent. However, you should bear in mind that you must pay a commission for the sale and a house sale through an estate agent could take months rather than weeks.
- Sell to a property buying company: A property-buying company is a fast and easy way to sell property, and you can often receive the money within 30 working days. This is an ideal solution if you are primarily interested in a quick sale. However, the main drawback of such companies is that the sale price will be much lower than you could expect through an estate agent or auction.
Unsold Auction Property – A Final Word
For sellers, the fact that your property did not sell at auction is not the end of the world.
Once you have ascertained the reasons why it did not sell and rectify them, a subsequent property auction will probably be successful. Alternatively, you could look at other ways of selling your property.
For buyers, unsold properties present a great opportunity. These properties still hold value and potential, often at negotiable prices. Essential information such as EPC rating, council tax band, and potential rental yield is usually available, facilitating informed decision-making. However, this may mean attending multiple auctions in different places before you find the deal you are looking for.
Back to UK Property Market blog