Property Auctions - A Buyers Guide

Why Buy at Auction?

It is a little known fact that there are over 400 property auctions held in the UK every year. Through these auctions over 30,000 properties are sold.

The type of properties sold at auction varies greatly, from large country homes to run down inner city terraces.

However, what they all have in common is the fact that they are not widely advertised to the general public, which is why some great bargains can be had. Some properties are entered into an auction due to their individuality - so consequently they are difficult to put a true valuation on them.

The vendors of these properties are as varied as the properties themselves. From the executors of a deceaseds’ estate, to banks that have repossessed houses. By selling at auction a quick easy sale can be achieved instead of the property lying empty for many months.

The advantage for buyers is that there is no gazumping and no jittery vendors to contend with who may be trying to decide who they would like to sell to. If a property is sold at auction it goes to the highest bidder... if that's you, once the hammer falls the house is yours!

Before the Auction

We would strongly advise that the inexperienced visit an auction on possibly several occasions before buying. Auction rooms can be intimidating places on the first visit and these early visits can prove valuable when one finally decides to buy!

1 Firstly we would recommend that you decide how much you can realistically spend on a property. You will need at least funds available to pay the deposit, this is usually required on the day of the sale. It is wise to check with the auctioneer which payment options are acceptable.
Any further funds required for the purchase of the property also need to be in place prior to the auction, as legal completion on the property is usually 28 days after the auction date. If you need finance, there are many specialist lenders who will be able to help you.

2 Spend time on our web site studying the properties that are available. Remember that new properties are added daily, so do not rush into buying the first property that you see. Try not to restrict yourself to only very specific properties, because as in buying of all property, compromise is often the name of the game.

3 Once you have identified possible properties, contact the relevant auctioneer directly. Try to get as much information as possible in regards to the property. It is a good idea to ask to be updated with any new information that they may receive. Information received at this time may well result in savings in professional advice in the future.

4 Viewing of the property usually has to be made directly through the auctioneer. In certain cases auctioneers hold "open days" on specific days when you will be able to view the property. Spend as much time as possible in the neighbourhood. A quiet area on Sunday lunchtime may not be as peaceful come Monday morning!

5 If required, and this is strongly recommended to the novice, advice should be sought from property professionals such as surveyors as to the structural state of the property.

6 Instruct a solicitor, preferably one with experience with handling auction property purchases, to inspect local and national searches etc. They will no doubt wish to see a copy of the auction catalogue, available directly from the auctioneer, for the conditions of sale and any onerous conditions.

7 Check the methods of payment that is acceptable by the relevant auctioneer. The majority require a 10% deposit, but this is usually subject to a minimum amount. This must be verified prior to the auction date.

8 As stated earlier, visit an auction before you intend to purchase. If possible, position yourself where to you can "watch the professionals in action." There may well be many people present who will be able to offer help and advice to the newcomer.

9 You would be ill advised indeed to purchase a property at auction when that purchase was dependant on the sale of any existing property.

10 As in any property purchase, it is the purchasers responsibility to insure the property upon completion. At auction the purchaser is usually responsible for the insurance "upon the fall of the hammer." Consequently suitable insurance will need to be arranged before the day of the auction.

11 It is not unusual for properties to be sold prior to the auction date. For many reasons vendors may well accept offers below the price quoted on the property details.

12 The guide prices given with the property details are the prices that the auctioneer expects the property to sell for given the prevailing market conditions. The reserve price, usually the lowest price the vendor will accept, may well be considerably below this - A VERY IMPORTANT POINT!

The Day of the Auction

1 If possible arrive early at the auction! It is not recommended to arrive "stressed" as this may effect your judgement. If you have any queries simply ask the auctioneer, the staff are usually very approachable and helpful. Ask for a copy of the addendum for any changes in the property details.

2 It is a good idea to get yourself a good position which will enable you to see all the bids that are made. It has been known for a bidder to be actually bidding against himself! Do not worry about making a bid inadvertently, auctioneers can usually tell the difference between a bonified bid and the scratch of a nose. If a mistake does occur, tell the auctioneer straight away, do not wait until the end of the sale.

3 When the lot that you are interested in comes up, the auctioneer usually states the address of the property. Make sure that this is the Lot you wish to bid on - It has been known for people to bid for lots contained in other auction catalogues.

4 For the more excitable people it may be advisable for your solicitor/surveyor to bid on your behalf. This will ensure that you do not get carried away and exceed your limit. A great deal of discipline may be required here!

5 It is usual for most properties to be subject to a reserve price below which the auctioneer cannot sell the property at auction. It is usually made clear at the onset that the property is being sold subject to a reserve price in the catalogue or the conditions of sale, although the reserve price is not usually disclosed. Please bear in mind that the auctioneer will use all his experience to reach the reserve price at the earliest time.

6 When attending a sale, bid for your preferred property up to your limit, but not beyond the top price that you have set yourself. Remember there will usually be another suitable property at a later date.

7 When the auctioneer's hammer falls and you are the last and highest bidder, you are then the successful purchaser and as such are legally committed to the pay the price that you bid and consequently complete the purchase of the property.

8 As the auction forms a binding contract the vendor must also complete the sale on the day under the terms and conditions stipulated in the contract. A higher bid cannot be accepted after the hammer has fallen.

9 Immediately after the sale you will be expected to contact the auctioneers staff to complete the necessary paperwork. They will require your full details and those of your solicitor. These will be used to prepare the Memorandum of Sale that you will be required to sign. The vendor's part of the contract will then be given to you, which you should immediately pass onto your solicitor.

10 At this time you will also be required to pay the deposit, normally 10% but again this point must be confirmed prior to the auction. Many auctioneers will present your cheque for special clearance, so you must ensure that the necessary funds are available.

11 As you will be responsible for the insuring of the property upon the signing of the contract it is advisable to contact your insurers to confirm all relevant details.

12 If the property did not reach the reserve price it is still possible to purchase it. Register your interest with the Auctioneer before leaving the saleroom. Indeed should the vendor be present, this maybe the ideal time to strike a deal.

If you have any doubts or concerns regarding the purchase of any property - do not buy. Cavet Emptor - buyer beware, carries no greater weight in the property market than at auction. YOU HAVE BEEN WARNED!

This Guide has been produced by Property Auction Search and is intended to provide the basic advice to buying at auction. Property Auction Search would advise all buyers that specific details and enquiries should be checked with the specific auctioneer concerned prior to the sale. Financial advice should always be sought from a professional financial advisor.