Costs Associated with House Auctions

Property is expensive business. Deciding to buy a house is not the same as deciding to buy some new clothes or even a new car. Buying a house is a huge commitment and therefore it is essential a lot of thought is put into making the decision before anything is decided on finally.

Buying at auction is no different. You may be getting a discount on the property but you still have to shell out a large sum to buy it. However buying a property at auction does not include any additional costs to those you would pay normally when buying a property - and thank goodness, since there are enough of them!

Costs to the buyer

The costs associated with buying a property at auction are exactly the same as those associated with buying a property in the conventional way. The buyer will have to pay solicitors fees for things like the survey of the house. He or she will also have to pay stamp duty, which is a government tax on the paperwork involved with the house buying process and varies in amount depending on the price of the house. Then there is the deposit, since few mortgages cover the 100% price of the house now. Some lenders will have additional fees too. All in all the buyer is paying an awful lot as it is without paying extra to buy at auction! The seller on the other hand does have to cough up a bit.

Costs to the seller

The seller has to pay a commission to the auction house for selling the house. This will come out of the money the buyer pays and is usually between 1 and 3%. The auction house may also charge what is known as a management fee to the seller for any other business that has to be taken care of involving the sale.

And it doesn’t end there. The auction house may ask the seller to contribute towards advertising costs. The auction house must advertise the houses on offer at the sale and often the seller has to help towards this, since it is their house being advertised.

The costs involved for the seller are usually not seen as a bad thing though. Selling your house at auction is quick and relatively hassle-free. The fact that the buyer is legally obliged to pay the remainder of the balance of the house sale within 28 days of the auction gives sellers piece of mind. It is helpful for the sellers to know the completion is imminent. The money is taken from the price of the house anyway and many would argue the benefits far outweigh the cons. People pulling out of deals at the last minute is not uncommon in conventional property sales but this should not happen at auction.

If you are looking to sell your property be sure to look around various auction houses to see who offers the best deal when it comes to commission and payments.

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