A landlord’s guide to selling by auction

A property auction is a fast and efficient method for landlords to secure a buyer, making it an ideal option for those looking to re-evaluate their property portfolio and maximise income. The process of selling by auction is straightforward and smooth, though there are some caveats that landlords need to be aware of, especially when selling a tenanted property.

To help ensure that you’re well-equipped and prepared to sell by auction SDL Property Auctions has compiled this guide that offers tips to landlords selling their assets and answers frequently asked questions about the process.

It is becoming increasingly common to see rental properties being sold via this method, even when looking at estate agent websites you are likely to see several tenanted homes up for sale by way of partnerships with auction houses. Whilst there are several reasons why a landlord may wish to sell up, there are a few clear reasons why auctions are growing in popularity within the property industry.

Properties that remain empty can quickly incur costs, including covering maintenance, ground rent, mortgage payments, and building insurance. In the rare case that a building is empty for an extended period of two years or more, landlords might also face charges from the local council which is known as a premium. With the open market subject to lengthy selling processes and the risk of a buyer pulling out, selling by auction is an attractive alternative as it can provide a quick sale and alleviate the worries of financial costs associated with empty rentals.

Experienced landlords may have multiple assets that they’re looking to sell or might even wish to sell their entire portfolio. An auction provides an efficient way to exit the market or refine investments within a short time frame. In addition to this, rentals often perform well at auctions as they give other investors the chance to quickly build a robust and diversified portfolio.

At auction, you can list several properties at one time and have these sold within the same event. This means you could liquidate your entire portfolio in one day if you wish, making it easier to keep track of sales.

Some landlords prefer to sell with tenants in situ as this means that they’ll receive rent until the completion of the property sale, generating a constant stream of income until the day arrives. This is also an attractive option for other buyers, as they’ll be able to immediately generate a new income stream. As such, tenanted rentals usually perform extremely well when sold by auction.

Properties without a tenant are open to a wider range of buyers as those looking to purchase a home for themselves may also show interest. The process of creating a legal pack remains the same, but of course, you will not need to compile a list of rental agreements and payment schedules, nor communicate with the tenants if they have moved out or will be moved out by the time your property goes to auction. However, you will need to account for any costs associated with vacant possession. If your tenants will be in the property during the marketing phase, you should make sure that they’re aware of any viewings or pictures that will be taken.

Whether you sell your property vacant or tenanted is entirely up to you, as there are benefits and considerations with each option. Which way you choose to sell depends on your personal circumstances and financial goals, but we’d also recommend that you assess the market. If the area your property is located is less focused on rental units, then selling a vacant property may yield more success. If the area has lots of potential for investment opportunities, then selling with tenants can generate a high sale price.

If you’re a landlord looking to sell, SDL Property Auctions offers an efficient and transparent service to help you quickly get a price that you’re happy with.