Have you ever considered buying a property at auction? Many think that auctions are for investors or property developers, but the method of selling at auction is becoming more popular, meaning a wider pool of properties to choose from. Compared to buying a property through the traditional method, auction purchases offer increased accessibility and benefits including a faster sale.<\/p>\n
Property auctions are a relatively fast way to buy property and they\u2019re a good way to find fantastic properties for relatively low prices.<\/p>\n
In the past, property auctions were mostly aimed at property investors and cash buyers, but recently they\u2019re increasingly popular with mainstream buyers and sellers too. As there\u2019s increased interest in buying a house at auction, more property owners and landlords are choosing to sell this way, which means that there are more properties to choose from.<\/p>\n
Sellers benefit from a quick sale at auction without the worries of a complicated chain and with limited opportunities for people to pull out. Auctions are especially useful if you\u2019ve inherited a property that you don\u2019t want or need, or if you need to move house quickly.<\/p>\n
Buyers enjoy auctions because there\u2019s a better chance of getting a rare find, or a property at a lower price for the area that it\u2019s in. It\u2019s also a perfect way to buy for people that love renovation projects because people often auction properties that are turning into a lot of work. Landlords like to buy at auction because they can invest in a property that might have been out of their price range otherwise, and it\u2019s a quick way to build their portfolio.<\/p>\n
The traditional auction is a very quick process with little flexibility. Once the hammer falls, you pay the deposit, contracts are exchanged and completion happens within 28 days.<\/p>\n
This is a slightly longer process and is known as a conditional auction. It\u2019s an online auction, which runs for 30 days and the winning bidder pays a reservation fee. You then have 28 days to exchange contracts and pay a 10% deposit, and then a further 28 days to complete.<\/p>\n
The best way to prepare for buying a property at auction is to do your research. Make sure you\u2019ve covered all the following steps before attending an auction:<\/p>\n
Decide where you want to live and look at the properties available within the area to see if they fall within your budget. You can then get more specific by contacting auction houses and searching property portals (like Zoopla) for properties that are currently up for auction.<\/p>\n
Before buying property at auction, it\u2019s vital that you visit it, and you can visit more than once. It\u2019s often worth taking along a professional builder to get some insight about the state of the property, as well as the potential costs for any renovation or improvement works it needs.<\/p>\n
The auctioneer will provide a guide price for the property, but this may not reflect the true value of it. Research similar properties in the area to see how much they\u2019re selling for and this should inform your decision about how much it\u2019s worth. Sometimes the guide price is very low, and this is done to increase interest and get more bidders attending the auction. Decide how much you think the property\u2019s worth and how much you can afford.<\/p>\n
Decide the maximum amount you\u2019re willing to bid and make sure you factor in any renovation costs you\u2019ll need to cover if you\u2019re successful at auction. You may need to arrange an Agreement in Principle for a mortgage, and you\u2019ll also need to have your deposit or reservation fee ready. Make sure you know what needs to be paid, and when, so that you\u2019re fully prepared.<\/p>\n
The auction house should provide you with a legal pack for the property ahead of auction. This pack contains the land registry and local searches, the title deeds, any special conditions of sale, property information, a fixtures and fittings list, as well as other important information and documents. Your solicitor can go through and check all these for you to make sure everything is as it should be and that you\u2019re aware of any issues regarding the property.<\/p>\n
If you\u2019re going to a traditional auction, then get a survey completed before auction day. This is your only chance to check for potential issues because it will be too late to change your mind if you\u2019re successful with your bid. If it\u2019s a modern auction you can do a survey after winning the bid, but you\u2019ll lose your reservation fee if you discover lots of issues and then decide to pull out.<\/p>\n
Before buying a house at auction, go along to other auctions to see how it\u2019s done. This will help you to prepare for your auction day, and it might also help control some of the nerves and uncertainties by making you feel more prepared.<\/p>\n
It\u2019s always worth arriving before the advertised start time of the auction because there can be last minute changes or new information about the property announced on the day. These announcements might have an impact on your decision to bid on the property so make sure you\u2019re there in plenty of time. It also gives you a chance to get a good seat that\u2019s near the front and in good view of the auctioneer.<\/p>\n
You need to have at least two forms of identification with you in order to place a bid. These could be your passport and a utility bill, for example. You\u2019ll also need your 10% deposit as this will be payable immediately should your bid win the property.<\/p>\n
The auctioneer will provide a guide price for the property, however, the current owner will also have a reserve price in mind. The reserve price is the minimum price that the customer will accept, and it can be up to 10% higher than the guide price. If the bids don\u2019t reach the reserve price, the auctioneer cannot sell the property.<\/p>\n
If you can\u2019t be there for the auction, you can send an agent in your place. Alternatively, the auctioneer can bid by proxy for you, if you sign off on it and provide a deposit for your maximum bid. The auctioneer will bid in increments on your behalf, stopping at your maximum bid.<\/p>\n
When you\u2019re ready to place your bid, calmly but firmly raise your hand (or paddle if you\u2019ve been provided with one). Clearly state your bid so the auctioneer can easily understand it. They\u2019ll then keep an eye on you for further bids as the auction progresses.<\/p>\n
It\u2019s very easy to get carried away when you\u2019ve got your heart set on a property. However, it\u2019s vital that you don\u2019t bid beyond your means as you\u2019ll be liable for the costs should you win the auction. You must be ready to walk away if you have to.<\/p>\n
If your bid on the property is successful, you\u2019ll pay the deposit and sign the contract immediately. The outstanding amount of money is then normally due within 28 days, but all the particulars will have been made clear in the legal pack. You also need to set up buildings insurance straight away as you\u2019re liable for it from this point onwards.<\/p>\n
If it\u2019s a modern auction, you\u2019ll just pay the reservation fee at this point and then it\u2019s time to get your survey completed.<\/p>\n
If you pull out of the sale after signing the contract, you\u2019ll lose your 10% deposit and there may be high administration fees to pay, amongst others. If it\u2019s a modern auction, and you pull out within the first 28 days, you\u2019ll lose your reservation fee. However, if you pull out after signing contracts you\u2019ll lose your 10% deposit on top of this. If the seller pulls out of the sale, you\u2019ll have your reservation fee and\/or deposit paid back to you.<\/p>\n
Buying a house at auction with a mortgage can certainly be done, but you have to work fast. There\u2019s only a few weeks between the property being advertised and the auction date so you need to line everything up quickly within that time. Make sure you get a survey done so that you\u2019re aware of any expensive and\/or structural issues with the property.<\/p>\n
Talk to mortgage lenders and get yourself a Mortgage in Principle so that you know the maximum amount you can borrow, and you can get your mortgage arranged quickly after auction day. Your mortgage lender will give you a Mortgage in Principle based on the value of the property, so if you bid above this amount, you\u2019ll be liable for the difference.<\/p>\n
There are many advantages to buying or selling your property at auction. The speed of the process is the biggest benefit, but there are also much less delays to the process and fewer people pull out. Additionally, if you\u2019re selling at auction, the money comes through relatively very quickly.<\/p>\n
If you\u2019re considering putting your property up for auction, find out how much it\u2019s worth by getting a free, no-obligation property valuation from our expert team today.<\/p>\n
It’s as easy as putting your hand in the air.<\/p>\n
Live Auction Bidding<\/a><\/p>\n Legal packs are made available prior to each live event. Visit our legal pack portal today.<\/p>\nLegal Packs<\/h4>\n