Buying a property at an auction can be a great way to find a good deal, but you need to know what you’re doing before you start. Elliot Oliver has a handy guide on property auctions – as well as properties like this studio flat to bid on – so dive in and find out more.
Find auction houses and estate agents in the area
Scout out the area you’re interested in and make friends with the local estate agents and auction houses. They can give you the heads up on imminent auctions as well as keep you posted about the properties going to auction.
Arrange a viewing and find out more
If you see a property you like then contact the auction house to arrange a viewing. Make sure you conduct a thorough viewing, look closely at the statistics for the neighbourhood and, if you can, bring along a builder to give you an idea of any work you might need to do and the costs. Your auctioneer will be happy to answer any questions you have, so fire away.
Get a copy of the auction particulars
The particulars contain all the important info, but you might need to ask for a legal pack to drill down further. You might find searches included in the legal pack, but if not, your solicitor can perform these before the auction.
If there’s anything you don’t understand in the legal documents, do ask for clarification before you go ahead with a bid as you could end up paying unexpected expenses.
Be good to go
You can take as long as you want looking for the right property, but once you’ve got one in your sights, you might only have three or four weeks to get going. Make sure you have your finances in order and a solicitor on standby.
Ask to be kept in the loop
Your auctioneers can keep you up to date on any changes to the sale conditions and also if there’s any possibility of the property being sold before the date of the auction. This doesn’t happen often, but it’s not impossible and so if you’re really keen, you’ll need to know.
Confirm your budget
Auction properties do tend to be cheaper than market value, but they’re often in need of renovations, so you’ll need to work out how much you’ll be spending in total and how you’ll be paying for it.
If your bid is successful, you’ll probably need to pay a deposit on auction day, so be ready for this.
Read the small print
Each auction house will have its own terms and conditions and by entering a bid you’re agreeing to them, so make sure you understand them. Look at the conditions of sale, what you need and pay and when and anything else in there.
Turn up a little earlier than advertised
It’s a good idea to arrive a little early to the auction so that you can find out about any changes to the property or its sale, as you might need to change your mind or your finances.
Understand the differences between guide and reserve price
You’ll see that each property is offered at a guide price but that it also has a reserve price. The guide price is often a good guide as to the reserve price, the reserve price being the minimum amount the seller will accept. The reserve price isn’t made available to bidders but is often around 10% higher than the guide price.
The guide price, however, can be a lot lower than the eventual sale price if bidding is energetic.
Make your bids clear and confident
When you’re in the auction, make sure your bids are clear and visible – some houses give buyers paddles or similar objects so it’s obvious that you’re bidding and not scratching your nose.
Don’t be so confident that you get into a bidding war that you can’t afford, though. You must stay within your budget – if you don’t bag this property, there’ll always be another one.
If you can’t attend the auction yourself, you can probably send someone on your behalf
If you can’t go to the auction yourself then you’ll probably be able to send in an agent or solicitor, although the auction house will need written authorisation from you. Some houses allow phone bids, especially if it accepts card payments as you’ll need to pay your deposit on the same day if you win.
If you win the auction, you are bound by the auction’s T&Cs form the moment the gavel falls
As soon as the auctioneer bangs his or her gavel, that’s it – you’ve won the auction and you’re bound by the terms and conditions of the sale and liable for the property’s insurance. You’ll also have to
sign the contract and pay the deposit there and then (or at least before the auction day ends. If you pull out after you win the auction you could incur large costs.
Make doubly sure you can pay the deposit and the balance
Your deposit will usually be 10% of your winning bid and it’s payable on the day. Make sure you have it ready and that you have two forms of ID on you. Once you’ve paid the deposit, you’ll probably have between 14 days and two weeks to settle the balance.
If a property doesn’t sell at an auction, you might be able to buy it privately
If a property doesn’t sell at the auction, for example if it doesn’t meet its reserve price or it gets no beds at all, then the seller might authorise the auctioneer to sell it privately. Let the auctioneer know if you’re interested in any unsold properties when you arrive and be ready to stay a bit later.
