Guide To Buying Property At Auction
1: Source future auctions
Identify all the property lots that interest you and contact the auction house for further information. Do this as early as possible.
Call the auction house to find out about viewing arrangements. The auctioneer will either take a deposit for the keys and allow you to view the property unaccompanied or they will organise for a local agent to show you around.
Work out how much you can afford i.e. your maximum bid. Estimate your total costs including repairs, decorations, solicitor’s fees, surveys, mortgage, removal charges, furnishings and add this to the amount that you will need to borrow.
Remember that if your bid is successful, you will need to put down a 10% deposit immediately. Usually you will also be expected to complete the payment within 28 days, and for this reason you will need to have a solid offer for a mortgage. Arrange this now and inform lenders that you intend to buy at auction.
PRICE INFORMATION: Guides are provided as an indication of each Seller's minimum expectation. They are not necessarily figures at which a property will sell for and may change at any time prior to Auction. Unless stated otherwise, each Lot will be offered subject to a reserve (a figure below which the Auctioneer cannot sell the Lot during the Auction). The Auctioneer expects the reserve will be set within the guide range or no more than 10% above a single figure guide.
Arrange legal assistance from a solicitor or licensed conveyancer. Legal enquiries from Local Authorities and Land Registries need to be carried out before you bid. Auction houses should normally provide a 'legal pack'. This contains legal documents outlining special conditions of sale and title deeds' details. You may now let the auction house know you are interested in the property and they will keep you informed of any changes relating to the property or the sale.
Lenders will require a valuation survey to be carried out, and if you are worried about the condition of the property you should commission a full survey.
6: Buy prior to auction
If you want to eliminate the risk of being outbid, you can always submit an offer in advance of the auction. If the vendor likes your offer they may accept it and withdraw the property from the auction.
7: Visit an auction sale
Before going to an auction to buy, you can visit an auction sale to see what happens, experience the atmosphere and get an understanding of proceedings.
8: Payment terms
If you are the successful bidder when an auction sale has finished, you will need to put down a 10% deposit immediately, and so you’ll need to know what types of payment the auction house accepts. Some accept personal cheques but most prefer bankers’ drafts and building society cheques. Get the amount made out to 10% of your maximum price - if you secure the property for less than this amount the auctioneer will refund you the difference.
9: Call ahead
Before you set off for the auction, call the auctioneer to double check that your lot is still going to be offered.
10: Arrive early
This way you will get a seat, hear the auctioneer's announcements and you’ll have time to speak to a member of staff if you have any last minute queries. It will also give you time to register your interest to buy.
When your lot number comes up the auctioneer will announce the address. Double check it’s the lot that you have come to buy before you start bidding. When you registered your initial interest to buy you may have been given a card to wave at the auctioneer but you can also use your hand to catch the auctioneer's eye as well.
If the auctioneer receives a bid higher than your own he will return to you in case you wish to better it. He will also warn you when the bid is about to be closed, usually three times "for the first time, for the second time, for the third time and final time – sold!" Remember to stick to your maximum price and do not get carried away.
Usually a property will have a reserve and if you meet it the vendor is legally bound to sell to you. You have won if your bid is the highest and the reserve has been met. The next step is to fill in a purchase slip requiring some personal details and the details of your solicitor. After this you will be asked to sign the memorandum of sale, which you will exchange for the vendor's part as soon as it's ready. This is your contract and should be sent straight to your solicitor. You will also be asked for proof of ID and your 10% deposit.
Once the gavel comes down the property becomes your responsibility. The auction house or your solicitor should be able to advise you.
14: Balance of payments
The balance of payment usually needs to be transferred within 28 days of the auction or the timescale set by the vendor. Remember, if this is not achieved you will forfeit your 10% deposit.