All house sales should be done by auction

[Brainfogmcfogface]

I’m going to start this by saying I’m not a house owner and likely never will be, so I’ve no personal experience but it seems on the surface to be better.

I was watching homes under the hammer and started to wonder why everyone doesn’t just use auctions to buy/sell property?
People are always complaining about various issues when selling/buying houses, parties changing mind/pulling out, chains collapsing, long waits etc so surely using auctions would stop all of that. All sales are final and immediate. You can view properties prior to sales, property packs are available, I know you’d need to get a survey done etc and still may lose the property if the bidding got to high, but couldn’t that happen anyway? You could get all that done and they Buyer pulls out? (Again not a home owner so genuinely don’t know) and for the sellers that could set a reserve so they would always get the price they want if not more.

So AIBU? Why isn’t more property brought/sold this way?

That would involve a massive change in the way houses are bought and sold in England.
If you are going to overhaul the system, and ideally the system needs changing, there are may things I'd do before moving to a system that is designed for cash buyers.

I bought my first house at auction and the second one the conventional way having sold the first the conventional way. The process was longer the second time but christ on a bike it was so much less stressful.

I did all the research I could possibly have done prior to bidding but at the end of the day there's only so much risk you can limit and if anything goes wrong in the 30 days you get from auction to completion (which it did in my case) your life savings are on the line. I can see how it works for investors but when it's your home the auction process is horrific. Was OK in the end but it was the worst 30 days of my life.

So only cash buyers can buy a house?

So unless you have enough cash you can't buy a house?

You need to have the finance in place before you go to the auction, because once the hammer drops, you’re committed. It’s not unusual for auction properties to be unmortgageable either, for a number of reasons, such as non standard construction, so you need to do homework before you go anywhere near the auction and view the property.

The experts stress reading the legal pack and making sure prospective purchasers understand what they’re taking on.

A better way, for the majority, would be a system that committed people when they make an offer, unless there was something totally unforeseen and removing properties from the market when an offer is made and accepted.

I bought at auction with a mortgage hence 'worse 30 days of my life'. Gambling my life savings on being able to get the mortgage in place in time. It was all going well until Santander changed their lending criteria two weeks in and rejected the application they had agreed in principle. I managed to get another lender in time so it is doable but certainly never again by me!

I'm glad you clarified in your OP that you know nothing about house buying because it'd be terrifying if you knew anything and were suggesting this.

1. This means it'd be almost impossible to buy a home unless you were a cash buyer - so, the exceptionally wealthy, landlords and flippers only.
2. You've have almost no opportunity to establish if the house is safe, can be insured, won't fall down etc - so you'd be spending hundreds of thousands of pounds on a complete gamble.
3. Because you can't establish if a property is safe, and the majority of people purchasing properties would be landlords, we'd end up with huge numbers of tenants in dangerous properties.
4. In conventional house buying, chains collapse and people pull out for a reason (i.e. because the property isn't safe or because they can't get a mortgage approved) - what do you think would happen differently in an auction? The sale would still collapse but the buyers would lose thousands and thousands of pounds to the sellers (and, often, it'd be because the sellers didn't disclose vital information).
5. Auctions tend to have a very short time for completion - we have a shortage of conveyancers, we simply couldn't get every house sale done in that time frame because we don't have the professionals to do so (even if they worked every waking minute).

Personally, I find it really frustrating how many properties are sold via auction. It's really shitty that every fixer-upper is either sold via auction or directly to agent's contacts without being advertised - so the rich get richer and the average homeowner has to pay a premium.

That means only cash buyers can buy a home? Also these auction properties are usually vacant. So wouldn't be ideal for someone who's in a chain, e.g. selling to move to another home.

A huge percentage, I imagine probably the majority, of house purchases are paid for with the proceeds of a house being sold as most people can only afford to own one at a time. This means with your immediate sale idea both houses would need to be sold on the same day, what happens if the one you want to buy comes up first in the auction, you don't know if your current property will sell or how much for. Very difficult if you are moving to a different area hundreds of miles apart or maybe it would all happen online with a simple PayPal settlement. Sorry I can't see that working.

There are other more practical ways of buying houses. The uk chain system is simply ludicrous though. Every other country I've lived in you buy a house with a bridging loan, move, then sell the old house. It means sales are done and dusted within a couple of months with a fixed date. The deposit is often actually a deposit too. Both sides lose a large chunk of money if they pull out of an offer so no stringing along then pulling out.

if our house had gone to auction we would not own it now as we were using pension drawdown money to buy it cash yes but there was a three month timeframe from offer accepted to getting the money in the bank we had a specific date and the process took the three months we had specified and we were in rented and property we were buying was empty probate property so no chain

Simply wouldn't/couldn't work. You couldn't commit to buying a house until your own is sold, so you'd be hoping your current house would sell early in the day, so you'd know how much money you had to bid on the one you wanted. Then if you sell your own, but are outbid for the one you want, you're basically homeless unless you managed to successfully bid on another one. Everyone would need 2 or 3 houses they were keen on to bid for on the same day as the one they're selling, which is impossible. What if you current house is listed towards the end of the day, you couldn't bid on any that were up earlier as you wouldn't know what you're house would sell for, if at all. All in all, a completely unworkable idea.

In Scotland, most homes are sold "by auction", the bidders submit their offer at a specified hour/day and the seller chooses which to accept. The only difference from a live auction is that the bidders don't know what anyone else has bid (though they know how many are in the ring) and there are no auction taxes. The seller and buyer's two lawyers then negotiate the details of the transaction.

In Scotland, every seller is legally required to provide a recent home report and valuation prepared by an qualified independent surveyor, and made available free to all interested parties. This has wiped out multiple surveys of the same property. Mortgage lenders usually accept the HR survey (unless it uncovered some potentially expensive problem that needs further specialist assessment)

Lots of interesting info here, thanks everyone. As I say I’ll probably never be in a position to buy, but the current system does seem rather arduous.

I agree that the system needs a thorough overhaul. However I agree with @KarrotKake that an auction based system would make house buying very difficult for anyone other than cash buyers.

Perhaps a system where survey and searches were done when a property went on the market. These would then be available to all potential buyers. With that the normal rules of offer and acceptance could be applied ie the contract has been made once an offer has been accepted.

Like many we have been let down in the middle of a purchase when the vendor dropped out for reasons which they already knew about.

Tighter rules on offer and acceptance would stop the uncommitted.

DS2 bought his house at auction. He’s got a mortgage so it’s not just cash buyers who can buy them, but everything has to be put in place beforehand.

After his experience I’d never buy a house at auction. We’ve just bought a house the conventional way and disregarded any house that was advertised to be sold at auction. DS2 had to pay the sellers legal fees. They left all their old furniture in the house, which he had to get rid of, even down to the fridge freezer which had been turned off a month beforehand and was full of food. The house literally stunk to high heaven.

DS2 really wanted the house and put an offer in for it not to go to auction, which was turned down. He bought it for less in the end.

You'd have to survey several properties maybe.
And all conveyancers would need to be auction competent.

I know which solicitor to use to buy a house at auction - and I have used him to buy a non-auction house too.

It would mean all the paperwork proving the house could be sold by that person would have to be done in advance which might be useful.
And information in the legal pack is always useful for everyone.

If the survey and searches were done by the vendor at time of listing (with a lifetime of, say, 12 months) with a requirement on the vendor to make no structural changes and to maintain the property to the standard as at survey then each property would only be surveyed once.

Putting this on the vendor rather than potential buyer would force vendors to acknowledge their dodgy DIY!

There is far too much put on the purchaser. It shouldn't be caveat emptor to the degree it is now. Especially when vendors hide their property's problems behind furniture and under rugs.

If I was reforming the house price system in England, I would opt for the same as in Scotland unless someone could improve on that.

Did they not try to start a system whereby the seller paid for, and created a sellers pack? A survey and searches done by the seller?
Or am I making it up???
If I am, it's an excelllent idea😁

Not very money making for surveyors/ solicitors though.

Wasn't that part of the plan for Blair/Labour's homeowner packs which were abandoned shortly ahead of the implementation date?

en.wikipedia.org/wiki/Home_Information_Pack

You obtain a home loan approval with the bank, so you know how much you can afford, then you bid at auction. It’s how it’s done in Australia.

I seem to have voted against the tide but I'll clarify. You are not being unreasonable to see that auctions have many advantages for both the buyers and the sellers. The fact that properties tend to get lower prices could theoretically be balanced out by the fact that the property you would buy in turn would be sold by auction too. Scotland I believe uses a sealed bid system which could be considered a type of auction. Advances in technology make online viewings and national auctions more of a thing which can increase the number of potential buyers but there are some problems you may not have considered and it certainly isn't an easy thing to change the way the entire system works.

1. to auction a house it needs to be empty (if sold with people living in it it isn't necessarily easy or quick to get them out.) costs of short term rentals can be high.
2. setting a date for an auction and having a high reserve price (almost equivalent to asking price) tends to see a lot of houses go unsold. People buying at auction tend to want a pretty big discount.