Understanding the Fees for Buyers and Sellers at Property Auctions
Property auctions involve fees for buyers and for sellers. For sellers, the fees are straightforward. For buyers, they can be a lot more complicated. The trick is, as always, to read the auction legal pack. There can be fees in there which you will need to know about before you put in your bid.
The Costs Of Buying Or Selling At Property Auction
Amy: How does the fee structure work when you are either buying or selling at a property auction? Obviously, there are fees involved. Can you talk a little bit more about them?
Fees For The Seller
Andy: The fees for selling property are fairly standard. There will be a fee, similar to what you would be charged if you were selling with an estate agent. Often, there will be an entry fee. You will have to pay for your advert in the catalogue. And there will also be a sale fee.
Fees For The Buyer
Andy: It's more important to consider the fees that buyers might incur at auction. Often there will be fees involved for a buyer which they wouldn't get if they were buying from an estate agent.
So, nine times out of ten there will be a buyer's premium, also called an admin fee. This is basically an additional fee that the buyer will have to pay to the auctioneer.
This might be £750. It might be a £1000. It might be a percentage of the purchase.
It varies depending on who the auctioneer is.
Obviously, this is an important thing to check on before you bid because you will need to factor that cost into your overall budget.
The Legal Pack
Andy: Something else to be aware of is that it's not uncommon these days for a seller to include a contribution to their costs into the legal pack. And this is another reason why it's crucial to read the legal pack.
So, it might be that on completion the buyer will have to pay the seller £500 towards their legal fees or pay £500 towards their auctioneer.
It could be 500 pounds towards their holiday fund, to be honest with you. Often, it's included only as an extra way for a seller to get more money.
Because there are people who don't do the research, as silly as that is. Some people will turn up and buy a property without reading the legal pack and then be hit with another £2000 worth of fees.
Savvy sellers will recognise that and target those people.
One of my jobs is to make sure that buyers have done their homework and are adjusting their bids so that any additional fees have been taken into account.