Top 8 Risks of Selling Your House at Modern Auction [2024 Guide]

Selling your house by modern auction is always a bit of a gamble. If you get lucky, modern auction can be a quicker, easier way to sell your home than via an estate agent. But this is never guaranteed…

So, is modern auction risky?

Choosing to sell your house at modern auction can be risky. The main risks are that your property won’t sell first time round (or at all), that the sale will take longer than you want, and you won’t get the price you expected. Even if you’re willing to take the risk, modern auction is not right for everyone.

In this article, we reveal the eight biggest risks of selling your home by modern auction.

If you want to cut to the chase and see if modern auction is right for you, we’ve created a free online quiz to help you do just that. If modern auction is a good fit, we’ll recommend the #1 Leading Auction House in your area on your results page.

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Risk #1 – Limited buyers

The first risk of selling by modern auction is that you limit your buyers.

We’ve been in the property industry for over 15 years and have been keeping a close eye on modern auction in that time.

In our opinion, selling by modern auction cuts out around 90% of your buyers (compared with selling through a good, local estate agent)!

Many people are opposed to buying through modern auction for the following reasons:

• They can’t buy at modern auction. Some buyers simply can’t afford their mortgage deposit PLUS a hefty reservation fee. They might also struggle to get their mortgage within the auction timeframes.
• They don’t want to buy at modern auction. Lots of buyers are put off or intimidated by the modern auction process. They also don’t want to deal with a modern auction company that has bad reviews and is based halfway across the country.

If you decide to sell your house by modern auction, you risk missing out on potential buyers who would otherwise be interested in your property.

This can have a knock-on effect on the speed and success of your auction sale, and the price achieved (more on this below).

Risk #2 – You won’t get the price you expected

One of the biggest risks of selling through modern auction is that you may not achieve the price you expected.

When you sign up to modern auction, you set a “reserve price” for your home. The reserve price is the minimum amount the property can sell for at auction.

While you may feel this gives you an element of control, it’s unlikely that you’ll generate any interest if you set an unrealistic reserve price. The likelihood is you’ll be pushed to reduce your initial reserve price once or twice before the auction concludes.

Top tip: The lower the reserve price, the more likely you are to achieve a sale. If you cannot afford, or wouldn’t be happy, to accept much lower than market value for your property, then modern auction probably isn’t right for you.

We’ve also seen an increase in auction houses overvaluing properties to win business, only to push for a price reduction once you’ve signed up.

We’ve spoken to readers who have been given valuations that make out they’ll achieve full market value and have their fees covered by the buyer…

BUT the reality is houses at modern auction on average fetch between 85-90% of their market value in our experience. Be wary of any modern auction houses that tell you otherwise.

Risk #3 – It won’t sell first time round (or at all)

There is also a big risk that your property won’t sell at the first auction (or at all)!

You should really consider this risk if you are choosing to sell by modern auction for the “speed” and “certainty” of the service.

Auction insiders have told us that some of the major modern auction houses are only selling between 30-40% of the properties they take on!

You will normally have to sign a 90-day contract, which means you’ll be tied in to two or three auction attempts if you fail to sell at the first auction.

This wastes a lot of your time and can also have knock-on effects on the value and future saleability of your property. (We explore these points in more detail below…)

Risk #4 – The sale might fall through

The fourth risk of selling your house by modern auction is that the sale might fall through.

Although the risk is smaller (around 5%), it is still something to consider if you need to sell your property within a certain timeframe.

Top tip: If you want, or need, to sell your home within a specific timeframe, it might be worth considering selling to a house-buying company.

A genuine house-buying company can buy your house in as little as 7 days, but it does come at a cost.

Take our free quiz to find out if selling to a house-buying company is right for you.

Unlike traditional auctions, buyers are not legally committed to the purchase. If they are unable to get a mortgage, for example, they’d be forced to pull out of the sale.

Risk #5 – The sale doesn’t complete in the 56-day deadline

One of the main appeals of selling by modern auction is the “set timeframes”.

However, timeframes can and often do run over which completely undermines this benefit.

No penalty is imposed if the sale goes over the 56-day completion deadline.

We’ve seen deadlines get extended by weeks, or even months in some cases.

Keep this risk in mind if you’re working to a strict deadline, as it can make things extremely difficult to navigate.

Risk #6 – Modern auction can devalue your property

As we mentioned above, there is also a risk that modern auction can devalue your property.

Your property will be advertised on Rightmove at the auction guide price (which will be way cheaper than market value).

This is how auctions work to generate the most interest in a short space of time and hopefully push up the price in the process when it comes to auction day.

However, if the property doesn’t sell at auction, prospective buyers may:

• have seen the house advertised at a low price,
• see that the house hasn’t sold at this price, and
• therefore, believe it’s worth even less.

This doesn’t just affect buyers either. If you then go to a local agent to try and sell your property, they will also have this perception and lose faith that your property is worth more.

There is also a misconception held amongst buyers that only “problem properties” go to auction. If your house doesn’t sell, buyers will be even more wary if it later comes on the market with a local agent. This leads us nicely into risk number seven…

Risk #7 – Modern auction can affect future saleability

A failed modern auction attempt can also affect the future saleability of your home.

Buyers may do their research and see the property has failed to sell at modern auction before.

This can plant seeds of doubt. Buyers may think:

• "If no one bought the house at this price, is it worth even less?"
• "If no one bought it, is there something they know that I don't?" (For example, they may suspect structural issues like subsidence.)

Of course, it's the new auctioneer or estate agent's job to overcome these issues. The "red flag" is there though, and you may expect a trickier sale next time around…

The property could potentially take longer to sell, and you may end up getting a lower price second time around.

Risk #8 – You might be following bad advice

Lots of estate agents recommend modern auction to sellers looking for a quicker, more certain sale.

Does this sound familiar? There is a big risk that you might be about to follow some bad advice.

Estate agents get a hefty referral fee for recommending modern auction. It can be double what they’d make selling the property themselves!

Unfortunately, they might be thinking about their fees rather than looking out for your best interests.

Make sure you do your own research and confirm modern auction is right for you before committing to anything.

Related: A good place to start would be to read our article… "Is Modern Auction Any Good? [Find Out If It's Right for You]"

Is modern auction the right selling method for you?

Selling your house by modern auction carries a lot of risks, and we rarely recommend it to our readers.

Whether modern auction is right for you will depend on your unique priorities, property, and timeframes.

If you want to find out if modern auction is right for you, you can take our free quiz.

If it seems like a good fit, we’ll recommend our #1 leading Modern Auction house in your area. If not, you’ll have a chance to book a free, impartial chat with a Home Selling Expert to help you figure out the best way to sell your home.

Click below to get started…