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Auction fees for sellers UK

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Auction fees

Understanding house auction fees is important for both buyers and sellers to navigate the process with confidence.

While it’s a common misconception that these fees significantly increase costs, genuine auctioneers will always be as transparent as possible and provide comprehensive guidance to all parties involved.

At The Property Buying Company, we operate a house auction, where we believe in making the auction process clear and straightforward. We openly discuss all fees and commissions before listing any property, and our legal packs offer detailed information to sellers.

To break down the financial aspect, we’ve broken down the typical auction fees for both sellers and buyers in this article.

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How much does it cost to sell a house at auction?

Contrary to popular belief, selling your home at auction is surprisingly affordable. In fact, for most auctioneers the overall cost is comparable to what you’d typically pay a traditional estate agent. Here’s a breakdown of the three main expenses involved in selling at auction:

  • Commission: Auctioneers usually charge a commission of approximately 2% +VAT of the final selling price. The advantage here is that this fee is only payable if your property successfully sells. 

  • Entry fee: Most auction houses request an upfront catalogue/entry fee, usually around £300+VAT or more. However, it may be possible to negotiate a deferral of this payment until after a successful sale. 

  • Auction legal packs:  Your solicitor will prepare the necessary legal pack, which typically costs £200 or more. This fee is due before the auction takes place.

While these costs can be steep, remember that selling at auction offers numerous benefits, including a fast and efficient sales process, a guaranteed exchange of contracts upon successful sale and the potential to achieve a higher selling price due to competitive bidding. 

You’ll be glad to know however, as a seller you won’t face any commission or entry fee when selling your house with The Property Auction Company. 

Does it cost more to sell at auction?

Let’s break down the costs of selling your home, using a £200,000 property as an example:

Traditional estate agents

  • Estate agents are usually the most expensive option, with commissions ranging from 1% to 3.5% of the final sale price, plus VAT. For a £200,000 property, this equates to £2,000 to £7,000 +VAT. 

Auction houses

  • Auction houses have a commission of around 2% +VAT (equating to £4,000 +VAT for a £200,000 property). Total fees can be around £4,500+VAT when accounting for the legal pack and entry fees. 

As mentioned before, if you sold your house with The Property Auction Company, you would not face any commission and we will cover all aspects of the house sale. 

Online estate agents

  • Online estate agents are more affordable than traditional estate agents, with fixed fees ranging from £400 to £1,500, but you may need to handle viewings and negotiations yourself.

Cash house buyers

  • Cash house buyers offer the quickest sale but will buy below market value, often offering 10% to 20% less — there are no fees however.

While auctions might seem expensive, they’re often comparable to traditional estate agents in terms of overall costs. Online estate agents offer a more affordable alternative, but require more involvement from the seller. Cash house buyers are the cheapest option but come with a significant discount on the property’s value. 

How do you calculate fees?

While a buyer’s costs might be higher, it’s important for sellers to understand their financial obligations when using a standard auction house. In order to calculate your auction fees, multiple the sell price by the auction fee percentage over 100. 

 Here’s how to estimate your expenses:

  • Sale price: This is the amount you anticipate your property will fetch at auction (£200,000 in our example).

  • Auction house commission: Typically 2% of the sale price (£4,000 in our example). Remember this is only payable if your property is sold. 

  • Auction legal pack: This is a necessary legal document that costs around £200.

  • Auction entry fee: This fee covers the cost of listing your property in the auction catalogue and usually ranges from £300 upwards. 

The total cost example sits at £4,500.

You may also want to consider moving costs (packing, hiring movers, potential temporary storage) as well as any mortgage exit fees. These both could bring up the fees to £9,500.

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Who pays the auction fees - buyer or seller?

Who pays the auction fees will differ depending on the auction house and type of auction. Some auction houses have flexible fee structures, allowing sellers to pass certain costs onto the buyer through the contract. This is often seen in Modern Methods of Auction (MMoA) and can be a good option for sellers looking to minimise their upfront costs.

While the buyer will usually pay the fees in open bidding auctions, other auction types and specific auction house policies can lead to different cost allocations. Always review the terms and conditions of the auction carefully to understand who is responsible for which fees before participating. 

At The Property Auction Company, while the seller will not face any commission fees, the buyer will be required to pay a buyers premium of £3,000 incVAT and a buyers administrative fee of £3,000 incVAt. 

While other auction houses will make the seller pay a 2% +VAT commission of the final selling price of the property. 

Does the type of auction impact the fees?

The specific type of auction can indeed affect who bears the brunt of the auction fees for sellers. In an open bidding auction, buyers will typically pay the auctions fees, including a buyer’s premium, which is a percentage added to the winning bid. Sellers might still be responsible for some initial listing fees but the majority of costs fall on the buyer.

In a sealed bidding auction, the seller usually covers the commission fees which can be 2% of the final selling price, with buyers still encountering smaller administrative or processing fees.

In a proxy bidding auction, both buyers and sellers share the financial burden. Buyers are charged a buyer’s premium on top of their winning bid and sellers pay the commission fee to the auction house. 

In a telephone or online bidding auction, both sellers and buyers encounter additional fees. Byers face registration fees, online bidding fees and transaction fees. Sellers on the other hand face listing fees, transaction fees and potentially technology related charges.

How much does an auction house charge the seller?

The house auction fees a seller can expect to pay at an auction house vary, but can include:

  • Commission: This is the main fee and is calculated as a percentage of the final selling price (usually 2% +VAT). It’s important to note that this is only payable if the property successfully sells.

  • Entry/listing fee: This is an upfront administrative auction fee to cover the costs of listing the property online and in the auction catalogue. It can range from £300 +VAT or more, but may be negotiable or deferred until after a successful sale.

  • Additional costs: Sellers should also budget for the cost of the auction legal pack, which is a set of legal documents prepared by a solicitor. This costs £200 or more and in some cases, additional marketing fees may apply for specialised advertising campaigns. 

Some fees, like the entry fee may be negotiable especially with smaller or less established auction houses. There are even some auction houses, like The Property Auction Company, who perate with alternative fee structures, waiving the commission and entry fee for the seller.

Before choosing an auction house, carefully review their terms and conditions to understand the full cost breakdown and compare it with other options, this will help you choose the best auction house for you.

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Additional expenses to consider

When selling your home at auction, it’s important to have a clear understanding of the associated costs to ensure a smooth and financially sound transaction. The two primary considerations for sellers are the sales commission paid to the auction house and conveyancing fees for legal services. 

Sales commission

Commission payments become due upon the exchange of contracts and are deducted from the final selling price before the remaining balance is transferred from the buyer to the seller. This transfer can be facilitated directly by the auctioneer or directed to your respective solicitor.

Due to the diverse range of properties sold at auction, commission rates are determined individually for each listing. This means that the commission for a residential property might differ from that of a commercial building or an undeveloped plot of land.

Conveyancing costs

Sellers should factor conveyancing fees into their budget when selling a house at auction. Conveyancing, the legal process of transferring property ownership, involves tasks like conducting property searches and updating title deeds.

These fees can vary based on the complexity of the property and the specific transaction details. It’s important to account for these expenses to accurately assess the overall cost of selling your house at auction.

We run house auctions every month

Why are house auction fees so high?

House auctions are increasingly popular among sellers, offering the enticing prospects of fast sales and increased chances of success compared to the traditional estate agent route. However, the accompanying fees can be a cause for concern.

Let’s compare the commission structures:

  • Estate agents: 1% to 3.5% +VAT payable upon completion of the sale.

  • Traditional auctions: Auction fees for sellers sit at 2% +VAT upon successful sale, plus an upfront fee of around £500.

  • Modern Method of Auction (MMoA): 3% to 4% +VAT, often with a minimum fee of around £5,000 +VAT, usually covered by the buyer.

The higher auction fees associated with auctions are usually attributed to several factors. Firstly, auctions offer a streamlined and efficient sales process, often culminating in a completed transaction within weeks rather than the months required with traditional estate agents. This accelerated timeline understandably comes with a premium.

Secondly, property auctions attract a pool of motivated buyers eager to secure a property quickly. This heightened interest increases the likelihood of a successful sale, even for properties that might face challenges in the open market. 

Lastly, the auction market is a specialised niche compared to the broader open market. This specialisation entails higher operational costs for auction houses, including expertise in property valuation, tailored marketing strategies and specific legal procedures. These costs are naturally reflected in the fees charged to sellers and buyers.

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Are there any less costly alternatives?

While house auctions offer a speedy and efficient route to selling houses, the associated fees can be a significant disadvantage. Let’s explore some alternative methods that might better suit your budget.

Sell your house DIY

Selling a house yourself is by far the cheapest way to sell your house initially. You will not need to pay any estate agent fees but you will need to carry out the entire house selling process yourself. You will also still need to hire a solicitor to carry out the legal side of the transaction.

Sell your house via online estate agents

Online estate agents offer a more affordable option. Their fixed fees usually range from £400 to £1,500, making them significantly cheaper than property auctions. But you will be required to handle much of the leg work of the house sale like viewings and negotiations.

Sell your house via cash house buyers

For sellers who want speed and simplicity, cash house buyers offer the quickest and easiest ways to sell, with no fees involved. However, they will offer below market value for your property, often 10% to 20% below its estimated worth. 

If you want to sell your house fast for cash, we can help you sell in as little as 7 days. We will cover all your legal fees and you won’t have to pay a single pound selling your house with us. 

Sell your house via The Property Auction Company

We stand out by offering a unique auction model with no seller commission fees. We handle all aspects of the house sale, ensuring a hassle-free experience for you. However our approach might not be ideal for everyone as our primary focus is on delivering a fast and efficient sale.

We run house auctions every month

Auction fee FAQs

Are auction fees tax deductible?

The tax deductibility of auction fees depends on your role in the auction (buyer or seller) and the nature of the property transaction.

For sellers; if you’re selling a Buy To Let property or any other property that is not your primary residence, auction fees such as commission and legal pack costs can generally be deduced from the Capital Gains Tax calculation when you sell the property. This means you’ll pay less tax on the profit you make from the sale.

If you’re a VAT registered business selling a commercial property, you may be able to reclaim the VAT paid on auction fees. 

For buyers; auction fees are considered part of the property’s purchase price and are not deductible for income tax purposes. However, if you’re buying the property for business or investment purposes, certain fees might be deductible as business expenses.

Are there any other additional auction fees?

While the auctioneer typically handles marketing and administrative tasks, sellers still incur specific fees. An auctioneer's commission is around 2% +VAT of the final selling price, usually paid upon successful sale.

The entry or listing fee is an upfront fee to cover the auction house’s administrative costs, and usually costs £200. Where the legal pack costs around £300 +VAT and covers the preparation of legal documents required for the sale.

Some additional marketing fees may also occur for specialised marketing campaigns targeting specific buyers through Facebook or Google advertising.

Do you pay Stamp Duty on auction fees?

Stamp Duty Land Tax is a government tax levied on property purchases in England. Residential properties valued at £250,000 or more and commercial or mixed-use properties valued at £150,000 or more are subject to SDLT. 

For sellers or property vendors, you are exempt from paying Stamp Duty as the liability falls with the buyer. The amount of SDLT that the buyer pays will depend on their circumstances, with different thresholds for first-time buyers. 

However these rates apply regardless of how they acquire the property. Whether they buy directly from the seller, through an estate agent or at auction.

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