Buying property at auction UK is a great way to avoid lengthy and complex buying procedures and bag a bargain. However, there are some important points to consider before buying a property at auction.
Buying property at auction UK is not just for developers or those with insider knowledge, as this mode of buying a property has become increasingly popular with buyers over the past decade who want to avoid the traditional house buying chain.
Prior to buying property at auction UK
- Research the properties and auctioneers in at the location where you want to buy
Decide on the location where you intend to buy and contact the property auction houses in the area. They will advise you on the upcoming auctions and add you to their mailing list so that you receive the latest auction catalogues.
- Arrange viewings
Once you have identified a few properties that meet your requirements, ask the auction house to arrange a viewing. Make sure that you thoroughly inspect the property and the adjoining areas. Consider taking a builder or supervisor along with you to identify what repairs may be needed at the property, and what would be the likely expenses. Do not hesitate to ask questions to the auctioneer if you have any queries.
- Ask the auction house for a copy of the auction particulars
The particulars are essential as they may contain the key information, but you may need a separate legal pack to know the details. Searches are often part of the legal documents, but, in case they are not, you will need to ask your solicitor to do them prior to the auction. Legal documents may differ from one property to another, so you should ask a solicitor to have a look at the legal pack for any loopholes as you may end up paying more than what you bargained for.
- Act fast
While it is necessary to take your time when considering any property, there are usually only 28 days between the publication of the auction catalogue and the auction itself, so you will need to act quickly.
- Ask the auctioneer to keep you informed
You can always ask the auction house to keep you informed if there are any changes or amendments to the sale conditions and, in case, you are really keen on a particular property, ask them to let you know if there is any possibility of the house being sold before the auction, as this has been known to happen.
- Set your budget and stick to it
Consider the maximum price you are prepared to pay for the house. While properties sold at auction may be cheaper than market value, they usually need renovations. Unless you are a cash buyer, you will require finances ready before bidding. Ensure that you know the deposit amount and check the method of payment in order to arrange the funds.
- Consider the fine print
Don’t forget to check the terms and conditions of the auctioneer whose services you intend to use as you will be required to follow their terms, and entering a bid means that you agree to their terms and conditions. Make sure that you know the conditions of sale and the amount that needs to be paid, and when, to avoid any surprises on the day of the auction.
- Make sure that the auctioneer is regulated
Check if the auctioneer is NAVA Propertymark Protected so that you know that the auctioneer is a qualified professional.
On the day of the auction
- Be at the auction on time
It is advisable to reach the auction hall well before the scheduled starting time. Any additional information or alterations to a property are available in an ‘Addendum’ or those will be announced by the auction house before the auction begins. Make sure that you are aware of any changes as they could have an impact on your decision to buy the property.
- Know the difference between guide and reserve price
Be aware that every auction property has a guide price, and is also subject to a reserve price. The guide price is the price at which the bidding commences, whereas the reserve price is the minimum price the seller will accept. Although the reserve price is not disclosed to bidders, it may be up to 10 percent higher than the guide price. So you need to keep this in mind when bidding.
- Making clear and concise bids
At the time of bidding, you need to make sure that your bids are clear; some auction houses may provide a paddle or something similar so as to easily identify a bidder. It is easy to get carried away during the auction proceedings, but you should try to be calm and never exceed your budget. The auctioneer should make it quite apparent what the current bid is.
- Someone should be able to bid on your behalf if you can’t bid yourself
In case you don’t intend to bid personally, an agent or a solicitor can bid on your behalf. Some auction houses will also allow telephone or proxy bids, in which case the auction house will need written authorisation from you as well as a cheque for the deposit.
- If you are successful, you are bound by the terms and conditions of the sale as soon as the hammer falls
If your bid is successful, you will need to sign the contract and pay the deposit on the same day. At the fall of the hammer, you will be bound by T&C of the sale and liable for the property’s insurance from that time. If you pull out of the sale at this point, it could result in huge after costs.
- Reach the auction room prepared with the deposit and aware of the payment terms
Auctions usually require a 10 per cent deposit on the day of the event as well as two forms of ID. You then have between 14 days to six weeks to pay the remaining balance of the purchase price and complete the deal.
- You may buy the property privately if it remains unsold
If a property does not sell, the auctioneer may have the authority to sell it privately immediately after the sale. Make sure to register your interest with the auctioneer prior to the sale and stay there till the end of the auction.
