The house-buying process can be lengthy and uncertain right up to the point of exchange. Buy at auction, though, and the deal’s sealed with the bang of the auctioneer’s gavel. But if you’re going to get a good deal there’s work to do beforehand. Be prepared with our guide to what to expect.
What sort of homes come up at auction?
Around 50 per cent of the properties that come up at auction each year are vacant flats and houses, according to EIG Auction Insight. Be aware that most will be in need of work. It’s also possible to find one-offs such as churches among the lots.
Get your finances in shape
If you’re buying with a mortgage, it’s vital to get the agreement in principle lined up before you get excited over a flat or house that’s up for auction. You’ll need to pay the 10 per cent deposit when the gavel falls and then have the remainder ready generally 20 working days later, so tell your lender the mortgage is for a property that’s being bought at auction.
Find auction houses
You’ll need to know which auction houses cover the area in which you want to buy. Search online and request catalogues.
For UK-wide information, EIG Auction Insight lists property auctions and has details on properties coming to auction and those that have been listed previously. Some information is accessible to browse but you’ll have to pay to access the whole of the site.
You could also check out UK Auction List. Subscribe to see properties for sale at auction and view a calendar of auctions.
Look at auctioneers’ catalogues
The catalogue is normally available two to three weeks before the auction, although properties can be online before that. You can register an interest in a property so you’re updated on its status. There will be a guide price, but this can change up to the sale day. Properties can also be withdrawn or sold before the auction.
View possible properties
As the fall of the gavel makes the buy legally binding, there’s plenty to do before an auction. You’ll need to view likely flats or houses (find out how to get the best out of this in our guide to viewing property), do your research on what a property might sell for – which will usually be a lot more than the guide price – and get the legal pack. The legal pack contains local searches, the fixtures and fittings list and seller’s information form, leasehold details if that’s applicable, and title deeds.
If the property needs modernisation and you don’t have expertise, you might want to bring a builder, surveyor or architect with you to viewings to ascertain whether buying it might leave you with a whole raft of costs you hadn’t envisaged.
Still keen? It’s at this point you’ll want to have a survey and get a solicitor to scrutinise the legal pack. Of course, all this costs money – and you’ll be spending it without knowing if the property will eventually be yours.
Buy a property before the auction
If you don’t want to wait until the sale because you’ve found the right property, you can make an offer in writing to the auctioneer beforehand. Be ready with the money if you do this. If the seller accepts, contracts are exchanged straightaway and you will have to pay the 10 per cent deposit with the other 90 per cent due within 20 working days.
Attend the auction
It’s worth going along to a few auctions to watch before you attend with the aim of buying. On the day, set a maximum figure you’re prepared to spend on the house or flat, bearing in mind all the information you’ve gained from researching what other properties have sold for, viewing it, the legal pack and from the professionals you engaged.
Arrive in good time to register. It’s worth checking with the individual auction house exactly what’s required in the form of ID and proof of your address, plus evidence you can pay the 10 per cent deposit. The auction house also makes an administration charge if yours is the winning bid, so be prepared for this, too.
Bid for the property
Make sure the auctioneer can see you and that your bids are clear – nodding or raising your hand will indicate you’re doing so. Don’t get caught up in the moment and exceed the maximum bid you set yourself beforehand.
Buying the house or flat
If the house or flat is yours, the memorandum of sale is completed immediately with the 10 per cent deposit payable and the rest usually due 20 working days afterwards. You must now insure the property.
Bear in mind that if you can’t complete the sale you will lose the 10 per cent deposit.
Online auction alternatives
Online conditional auctions are an alternative to attending a traditional sale. You’ll need to check out the property and the accompanying information online. If you’re still keen, you can get a solicitor involved, then register a bid.
In exchange for a non-refundable fee, the best bidder will get a period of exclusivity in which to obtain a mortgage, get a survey and exchange contracts with a fixed completion date that’s likely to be within eight weeks of winning the bidding process.