Are you planning to sell your property in the near future? Or perhaps you have plans to invest in a new property or move up or down the property ladder. Whatever situation you find yourself in, having a clear understanding of how the property market works is crucial.
One of the areas that can often cause more than a little confusion is that of estate agents and auctioneers. Are they one and the same? The short answer is no, most certainly not. So, what are the key differences? Allow us to provide you with a clear and concise outline below.
The Way The Property Is Marketed
When it comes to marketing the properties on their list, both estate agents and auctioneers have to work hard, knowing that the line of work they are in is fiercely competitive. This means that both estate agents and auctioneers make use of some of the same marketing processes, simply because they know that they work. For example, they will tend to make use of popular search portals, to ensure that their properties reach a wide audience.
One difference though is that auctioneers tend to produce an auction catalogue which they then post out to potential buyers who have already shown an interest in the auction. This catalogue can normally also be viewed online.
How Much Property Detail Is Provided
Sometimes people relate buying a house at an auction as having a higher risk than buying from an estate agent. Often this perceived risk is not down to the party doing the selling but rather related to the amount of information available on the property. In general, properties that are sold by estate agents have more detail available for prospective buyers than properties that are sold at auction. Of course, this is not the case in every situation.
How The Property Is Viewed
Since the process of selling a property at an auction tends to be considerably quicker than that of an estate agent, the opportunities to view the property can also be somewhat limited. Often allocated time slots are available, these may be advertised as open house viewings. In cases where houses are derelict or in need of considerable repair, viewings may be even more limited.
Estate agents vary rather significantly here. Viewings tend to be arranged at a time that suits both the seller and the prospective buyer. Often it is possible to arrange several follow up viewings and buyers are not usually rushed during the process.
How The Property Is Priced
When a property is for sale through an auctioneer they will normally use a ‘guide price’. Usually, the guide price is set at an amount that is lower than the market value. This is done with the strategy of attracting a higher number of potential bidders. The guide price tends to give an indication more of where the reserve may be set at as opposed to what the property is likely to sell for, in saying this, the reserve amount is never disclosed so could be close to the guide price or significantly far from it. The number of bidders and the amount of interest in the property on the day of the auction is what will influence the final sale amount, not the guide price.
When a property is for sale through an estate agent an ‘asking price’ is set. Usually, if an interested party makes an offer which is close to the asking price it tends to be accepted, unless, of course, there are several interested parties, in which case the house may sell for more.
How The Property Is Sold
The way that an estate agent will sell a proper is very different from the method that an auctioneer will use. Estate agents accept offers from interested parties, when an offer is accepted the sale proceeds, and ultimately the property changes hands at the end of the process. When an auctioneer sells a property they will hear bids and sell to the highest bidder, provided the reserve has been met. Contracts are immediately exchanged.
Fees Required
Estate agents tend to come to an arrangement with the vendor where they will receive a small percentage of the final price. This percentage tends to be set around 0.2- 0.5% but can vary. This fee normally includes all marketing, viewing, negotiations, and so forth.
Fees required to be paid when a property is sold by auction can include administration charges, buyers premium, disbursements (legal fees, searches and so forth).
What Type Of Buyers Does Each Attract
Estate agents tend to attract people who are buying a home for themselves. First-time buyers are certainly keen clients for estate agents, as well as home movers, people who need to upsize, and those who wish to downsize. Often such buyers find the overall process of buying from an estate agent to feel reassuring, secure, and unrushed. People who need to sell their current home and then purchase a new property will often find those estate agents can provide a good framework to help this transition run smoothly.
On the other hand, properties that are sold by auction will often attract a different type of buyer. These are often people who have experience within the housing market. For instance, property developers, investors, and those within the commercial world. Of course, there are, at times, people who are buying for themselves who will purchase a property sold at an auction, however, usually this means that they need to be in a position to buy without using the traditional mortgage framework.
The Bottom Line On The Difference Between Estate Agents And Auctioneers
While both estate agents and auctioneers sell houses, the process each one uses is considerably different. Estate agents tend to provide more details to the properties they are selling, viewings are ample and frequent if needed, asking prices give a good gauge of the expected sale value and the framework is user-friendly for most buyers. Auctions. on the other hand, may provide less details on the properties they are offering and have limited viewing possibilities, however, the properties sold can be very investable and appealing to those experienced within the housing market.
