The number of people buying and selling homes through auctions has increased in recent months as the auction sector has adapted to the coronavirus crisis better than most. The transition to online-only was easier for this sector because most auction houses already had online systems, processes and models in place.

People also appreciate auctions for the transparency, security and speed they provide, as well as the ability to buy and sell 24/7.

However, for the uninitiated, the world of auctions could potentially be an intimidating place, so here at Opal Auctions we have outlined five FAQs to put the minds at rest of people considering the auction route.

How is a property marketed at auction?

A seller’s property can be viewed by buyers live on an auction house’s website as well as being marketed on all the major portals (Rightmove, Zoopla, etc). What’s more, property alerts will be sent out on social media to remind people of potentially suitable homes, while here at Opal we have a global database to which alerts are sent. Put simply, the exposure a seller’s home will receive is considerable, while a buyer will be given plenty of opportunity to purchase their dream home or investment opportunity.

Typically, property marketed via online auction will be there for up to 28 days, with the live bidding commencing after this for a period of five days, 24/7. Buyers can download the all-important legal pack – to know what kind of property they are getting - and place a bid through the website once the property is live on the platform. For sellers, the time remaining in a specific auction will be clear in the property details.

How long does it take to sell?

Once the electronic hammer falls on the successful bid, sellers can be reassured that the buyer is committed and will be unable to pull out of the sale without severe financial penalties. Both sides can also be safe in the knowledge that the process will move quickly after this point, with the need to exchange within 28 days, and completion happening within a further 14 business days after that.

Here at Opal Auctions, we run two types of auction – a ‘bidding’ process and a ‘Sell Now’ process. In the former, once the buyer has made their successful bid, they will automatically be charged a buyer’s premium fee. This is, in other words, the auctioneer’s fee and is non-refundable. At this point, the buyer must work with their conveyancer to exchange contracts within 28 days. Upon exchange of contracts, they must also pay a 10% deposit to the seller’s conveyancer.

Meanwhile, those selling via the ‘Sell Now’ process – which offers extra immediacy and clarity – will receive an exclusivity reservation fee of 1% from the buyer, paid to the seller’s solicitor on exchange of contract. This is in addition to the buyer’s premium fee unless there is a structural issue with the home. Similarly, if there are building alterations without planning permission which weren’t detailed in the Sale Particulars or Special Conditions of Sale, then the buyer won’t have to pay this additional cost.

Can homes with sitting tenants be sold at auction?

Absolutely – and for some landlords and investors, this is a very attractive proposal as they get an immediate return on their investment and don’t need to worry about occupying their properties with new tenants.

For investors and landlords looking to grow their portfolios quickly and smoothly, tenanted properties can represent an excellent investment. Again, investors can choose to either purchase through a traditional online auction or through the Sell Now feature mentioned above.

It’s not just experienced investors who could benefit from this, though – first-time landlords might like the idea of having reliable tenants already in place, taking away the stress of having to source new ones.

For landlords or investors selling a home with tenants in situ, it means there is no need to go through the long-winded and complicated process of regaining possession of a home in order to sell it, which is made doubly difficult at the moment because of Covid-19 and an effective ban on evictions across most of the country.

How does the bidding process work?

The bidding process for a traditional online auction is much the same as the in-person experience. Buyers can do it online or via proxy and will be notified whenever any rival bids are made. There is nothing to stop you making a further bid if you have been counter bid – just as you would in a traditional in-room auction.

Once a bid is placed, the auction house’s system will automatically move the next bid to the minimum increment. For sellers, that competitive, adrenaline-fuelled momentum can still be created, while for buyers the process is clear and transparent at all times.

For buyers, it’s important to remember that once the electronic gavel falls, the sale becomes legally binding and there is no backing out. At this point, the buyer will need to pay the Buyer’s Premium Fee of 1% plus VAT (this is also subject to a minimum amount of £3,000) through the credit card they’ve registered with. As such, it’s vitally important that buyers have the means to pay this and the financial plan in place to exchange and complete within a short timeframe.

How can buyers know how much time they have left?

Each property has a countdown timer attached to it to ensure that bidders can see how long is left of the auction. This might encourage them to act fast or decide that this particular property is not right for them.

If a bid is placed late in the day – say, for example, the final 30 seconds of an auction – the auction timer will automatically reset to 30 seconds to allow other parties a fair chance of placing another bid. When the countdown hits zero, the auction ends.

While the seller has the freedom to decide how long the auction runs for – within the boundaries of seven to 28 days – we usually recommend a bidding time of five days after a 28-day marketing campaign to keep buyers motivated and interest high but also to provide enough breathing space for buyers to make their bids.

To find out more about selling your property at auction, click here. For a guide on buying at auction, please click here.