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Buying at Auction Guide

Property auctions provide the ideal place to pick up a bargain home, however there are several important considerations to bear in mind.

Buying property at Auction

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 Agents.

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 property 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 property 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.

These packs are available to view online at the Auctioneers website or a photocopy of the pack can be ordered for a small charge from the Auctioneers.The pack can also be to viewed at the Auctioneers offices or in the auction room on the day of the sale.

It is important that either you or your solicitors inspect the legal pack prior to auction to make sure the property has a clean bill of health.

7. Auction day


Arrive at the auction with plenty of time to spare. Important announcements are made at the start which could relate to the property you wish to buy.

Pick up a copy of the addendum; it notes any alterations to the properties being sold at auction.

On arrival you will also need to complete the following steps:

  • Registration - you will be asked to complete a registration form and you will be issued with a bidding number.
  • Personal details - you need to produce an item of personal identification such as a passport or driving license. If you are buying on behalf of someone else, you will need to contact the auction house to obtain a list of qualifying documents.
  • Solicitors details - you must bring the name, address and telephone number of the solicitor who will be acting for you from exchange of contract to completion.

Once the bidding begins the auctioneer will describe each property in turn, he will then suggest an opening bid and invite bids from the floor.

When the highest bid is reached and no more bids are forthcoming, the auctioneer will drop his hammer and the property will be sold.

When at an auction, do not get drawn in to bidding more than you can afford to pay. Remember, once the hammer drops you are obliged to meet the price.

Should your bidding prove successful you will become the new owner of the property and you will need to:

  • Pay the deposit - usually 10% of the sale price, or a minimum of £2,000 if the property is sold for less than £20,000. Deposits should be paid by bankers draft, building society cheque, company cheque or personal cheque.
  • Sign the memoranda of sale in duplicate.
  • Pay an administration charge - usually around £800 (incl. VAT).
  • Obtain the contract - a copy of the memoranda of sale is supplied to you together with a copy of the legal pack, which you must take to your solicitors.
  • Arrange insurance - from the time the property is sold to you it is at your insurable risk. Please make sure that you obtain insurance cover urgently after the auction.

Countrywide Property Property Auctions and their sister company Westcountry Property auctions make up one of the UK’s largest regional property auctioneers, holding more than 25 auctions in England, Wales and Scotland each year. To find out more about the properties for sale at our forthcoming events, contact Property auctions or call 020 3151 9172.

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