Buying at Auction

See All Guides

In recent years buying properties at an auction have become more popular. One of the main attractions that drive people to buy at an auction is the potential for a bargain. Also, at an auction house buying is condensed into a matter of minutes rather than months. However if you are a private buyer there are a number of key issues you need to consider before making your first serious bid at a property auction:

Understanding Property Auctions:

Properties at auctions are mainly bought by investors, property developers who sell them at a later stage at a profit. Most auction properties are on market because of repossession, bankruptcy, or because the seller needs to clear their debts the owner has died and the property has been left empty they are in need of some or a lot of renovation work - it's rare that properties in 'move in' condition come up for sale through auction they are very unusual and difficult to value So, if you are first time buyer or looking for property in move in condition reconsider buying at auction. Auction buying may look as a spontaneous and impulsive however if you are investing in a property it is vital that you prepare yourself to ensure a successful purchase. Be aware that buying at auction is a binding commitment and carries the same legal implications as a signed contract by private treaty. In most cases, auction offices have copies of legal documentation provided by the seller's solicitors which can be sent to you.

Basic preparation before you go to an auction

Visit the auction house to see first-hand how an auction process takes place. Attending a few property auctions will give you a good overview and confidence. Speak to the auctioneer if you need any clarifications Get a catalogue, listing details of the various properties to be auctioned. There are various property auction websites and you can also subscribe to catalogue mailing lists as well as property auction publication. Read the terms and conditions printed in the catalogue carefully Check out the extra costs which will have to be taken into account in your bidding amount such as solicitor's fee, auctioneer's commission, estimate of the renovation work (if the property needs it) etc…

Choosing the right property to bid for

It is important that you are careful in your selection of the property you wish to buy because any survey costs are payable by you, whether you are successful on the sale day or not. Research the market carefully to find a selection of properties and arrange with the auctioneer a viewing as soon as possible. Go through the catalogue carefully, read the details thoroughly and identify the properties you are interested in. Do arrange a viewing of the lot(s) - viewing arrangements will be listed in the catalogue. View any properties you are interested in. Research the property thoroughly and ask local estate agents and neighbours for their opinions. Check the description of the lot in the catalogue is accurate. Carry out the usual property/land searches

Secure your finance/mortgage before you bid

If your bid is successful then you need to pay 10% deposit immediately and the balance within 28days. So it is important that you get your finances/mortgage in order. Also, ensure you let your mortgage lender know you may buy the property at auction as some lenders are reluctant about it. Therefore it's vitally important that you have the money ready in advance. You shouldn't bid for a property at auction if: You don't have a firm offer of a mortgage The sale of your old home has not yet gone through.

Ways to bid

With modern times, one can now bid in a number of ways. You maybe able to bid by telephone or online but do check with the auction house about this in advance. If you don't feel confident about bidding yourself you can also have someone else represent you and do the bidding on your behalf.

Actual Bidding process

Remember to take two forms of identification, cheque book and all your banking details with you to the auction. If possible, arrive early and familiarise yourself with the empty auction room. On arrival, you may need to register with the auction house in order to bid prior to the start of the auction. Check with your auctioneer. The seller will have fixed a reserve price with the auctioneer. This is the lowest price they are prepared to accept, and if this price isn't reached, the property will not be sold. If the reserve price isn't met, you could try contacting the seller afterwards and trying to negotiate a sale. Follow the bidding. When the sale begins, the auctioneer will call out each lot number and will start the bidding at slightly below the lower estimate. As the people signal to him by waving or nodding he will call out their bids in regular sums or increments. Attract attention to your bid. In a packed saleroom don't be afraid to attract the auctioneer's attention: wave your catalogue or bidding card and call out if need be. However, if the bidding is rising rapidly, the auctioneer will usually only take bids from two people at a time. When one drops out he will look around the room for someone else to join in. If you are still within your limit that is your moment! When it's all over. The auctioneer will indicate that the bidding is finished by banging a small hammer, called a gavel, on the rostrum, and recording the sale and the name or number of the successful bidder.

Backing out of a successful bid

If you back out of the sale at this point, not only will you lose your deposit, but the seller will be able to take you to court. The court can make you: pay the seller's expenses, and pay the seller the difference if they eventually sell the property for less than the price you originally offered.

Useful Services

Exclusive Launch Offer for Agents