Buying at Auction Guide

1. Introduction

Over the last decade, auctions have become a popular way of buying property.

Along with the potential to save tens of thousands of pounds on the value of the property, the speed at which you can secure your desired home is greatly increased. Often it only takes about 4 weeks from viewing the auctions brochure until exchange of contracts. Completion usually then follows within 20 working days.

A property auction is effectively a collective sale, usually held at an auctioneers' salesroom, designed to provide a way of selling properties quickly and easily.

Properties come to auction for a number of reasons:

• The vendor may require a quick sale.
• The property may have been repossessed.
• The property may require significant redevelopment or renovation.
• The property may have proved difficult to sell on the open market.

Prospective buyers attending a property auction will need to have assessed the properties on offer, viewed the ones they are interested in, organised funding, undertaken the required conditional and legal checks, whilst settling on a preferred buying price.

At the ‘drop of the hammer’ contracts are exchanged and the property is sold. It is therefore very difficult and costly to pull out of a sale after the hammer falls.

2. Choosing your property

Having made the decision to purchase a property at auction, the first thing you should do is obtain an auctions brochure or view properties to be auctioned on the auctioneer’s website.

With a location and budget in mind you can then arrange to view any properties you are interested in. This can be done through the local estate agent.

When viewing the property, be sure to assess its condition paying particular attention to electrical wiring, central heating and dampness, etc.

3. Preparing for the auction

Once you have identified a desired property, the next step is to register your interest with the auctioneer prior to the auction. This will ensure the property is not sold before the auction to someone else without you knowing.

When buying property at auction there are a number of preparations you must make before you can bid for a property. These will often involve financial outlay:

• Surveying costs.
• Non-refundable mortgage booking fees.
• Legal searches.

Even though you may have spent money on these preparatory activities in this way, there is no guarantee that your property bid will be successful and as such your money may be spent in vain.

4. Obtaining a survey

Obtaining a survey will enable you to ensure that the property is in a fit state before you bid on it. The cost of doing this will depend on which type of survey you choose. The options are:

• Valuation Report - the most basic report that money can buy.
• Homebuyers Report - an interim report providing more information about the property than the valuation report.
• Building Survey - the most detailed and expensive report.

Read our Property Survey Guide for more information.

Providing the survey does not highlight any significant issues or problems, the next step will be to arrange the finance on your purchase.

5. Funding your auction purchase

Before you attend the property auction you should first ensure all of your finances are watertight, as there will be legal obligations and penalties if you are unable to complete the transaction.

Unless you are a cash buyer, you will need a firm offer from a mortgage lender before you can bid. It is advisable to seek professional mortgage advice. Mortgage offers can take weeks to process so do not delay your appointment and let your advisor know about the auction so that things can be progressed quickly.

For more information on property finance read our Guide to Mortgages.

6. Legalities of buying at auction

Before attending the auction it is advisable to appoint a solicitor. Once appointed, your solicitor will need to view the property’s legal pack. Typically this will include;

• Memorandum of Sale.
• Special Conditions of Sale.
• The local search (if and when available).
• Land Registry Search.
• Epitome of title (proof of ownership).
• A copy of any lease affecting the property.

A copy of the pack can be obtained for a small charge. Alternatively your solicitor can view it at the Auctioneers’ offices or on the day of the auction.

On inspection of the pack your solicitor will be able to advise you whether or not the property has a legally clean bill of health.