Guide buying from a property auction
This Guide will help you how to buy a house, flat or any property from a UK property auction house.
First, select an area you are interested in, then find out what local auction houses exist for that area. The national auctions will cover all of England & Wales. The leading national ones are:
- Barnard Marcus Auction house
- Harman Healy Auction house
- Allsop Auction house
- Stretton’s Auction house
Research the properties and auctioneers in the area you want to buy
You can check out the British Landlord Association full list of all the UK property auction here.
Check the value of house or flats you are interested in by using Zoopla, Rightmove, so you have a reasonable idea what the average price of a property you are interested in is worth.
You can also visit a website nethouseprices where you can research the properties sold on any road or street in the UK. This website is beneficial as it may even reveal what price a property sold for last time, the exact property you are interested in an auction house.
- Arrange viewings and ask questions
It vital you go and see the property before bidding and take a builder friend with you, someone who has building experience. If the property needs to be updated, at least you will have some idea, the likely costs for the work required.
Take plenty of photographs. Ask the auctioneer or rep who is doing the viewings plenty of questions. The critical question is how much interest you have had on this property etc.
- Auction particulars
Nearly all auctioneers publish brochures, and the brochure is available online too. The online brochure and the hard copy do not contain the same depth of information, look at both versions.
- Buying from an auction you need to act fast
From the date the brochure is released, the auction date is usually 14 days, so you do not have too much time to act.
You must register online with the auctioneer, once you have done this, obtain the “Legal Pack” download this. The legal pack is usually free and is a vital part of buying from the property auction house.
- Check regularly on any updates
It is common for the particulars of a property to be amended, the guide price adjusted so you should ensure you keep checking and speak to the auctioneer to see if any changes have been made.
Check to see if there is an Addendum for the property/lot you are interested in. Sometimes a property maybe is withdrawn or sold before the auction, so recheck the day before the auction date to avoid disappointment.
- Stick to your budget
You must calculate what you are prepared to pay for the house or flat you are interested in and stick to it.
It is very tempting to offer just a tad more and more and before you know it you have paid too much. It is very easy to get carried away when bidding; it is important you are disciplined, have a close friend or family member with you when bidding this can help.
Check the Auction small print
Each auction house functions differently, and their terms & conditions vary so do the way they work. You must check the terms & conditions and all other auction documents, including the legal pack of the house or flat you, may be interested in.
- Be Punctual
Buying from a property auction involves research and lot of work before the auction date, you must allow plenty of time to get ready so that you can bid, do not leave things to the last minute.
Due to COVID-19 most auction houses operate bidding electronically, so you may want to consider a backup should your internet connection fail. Mobile phone tethering etc. is worth considering as a back.
What is the difference between guide and reserve price
Guide price and reserve are not the same; you must understand the difference between the two.
A guide price is a figure set to lure people into the auction hall. The Guide is rarely the same as the reserve price. The Guide price on average is 10% less than the actual price the seller wants. You must factor this into your calculations.
- Make sure your bid is clear and concise
Currently, due to COVID-19 most if not all auction houses operate bidding online. You must ensure you understand the online process and familiarise yourself with the auction house website.
Speak to the auction house staff to run through the online process so that you can bid properly using the online facility.
Ordinarily, before COVID-19, some auction houses will give you a paddle or something similar so that the auctioneer may quickly identify when you bid.
- Can someone else bid on your behalf at auction?
All auctioneers have a few methods of bidding for a property. You should contact the auction house or visit their website to check the options.
You will need to ensure you leave sufficient time to deal with the process of bidding if you cannot attend yourself. Documents and a cheque or debit card payment may have to be processed well before the auction date.
- Read the auction T&Cs before the gavel falls
Before bidding you must make sure you have read the terms & conditions including special conditions well as the legal pack. Upon the gravel falling and you winning the bid you are legal bound in contract to the purchase.
You cannot then raise any requisitions later.
Before bidding is essential, you seek legal advice on the legal documents related to the property you are buying and the legal documents relating the auction house too.
- Make sure you have the 10% deposit
Upon successfully winning a bid, you are immediately required to pay 10% deposit towards the purchase price. Note most auction houses also charge a buyer fee. You must check carefully what the buyer’s fee is before bidding.
If a property is unsold, can I buy it privately?
Some lots are not sold, these lots can sometimes be rich pickings. You can speak to the auctioneer and maybe offer the guide price, which is usually 10% less than the actual selling price.
How to buy a tenanted property from an auction
If you are buying a property from a property auction house with a tenant in it, you must be cautious. You must seek legal advice, and it is vital you have all the tenancy and all tenancy related documents from the landlord.
Buying an investment residential property from a property auction carried risk, and you must be aware of the risks.
British Landlord Association members can seek free legal advice from the member’s helpline if you are buying from an auction.
Buying property using online auction
Most auctioneers are now operating an online bidding process due to COVID-19, you must be aware of the process and how the website of the auction house functions before bedding.
Why buy property at auction?
Buying through a property auction house, especially by those who have cash funds can be a brilliant move, on average, you should be looking to pay between 10 to 20% less the market value.
The process is quick and efficient provided you follow the guidelines here and on the property auction house website.
How to buy a house at auction?
Every property auction house operates; differently, you must check the documents and guides on the property auction house website. This Guide will give you some tips and guidance too.
How much does buying at auction cost?
Each auction house has various fee structure, so check the property auction house website before you proceed. If in doubt, send the auctioneer an email and seek clarity on any issue where you are unclear.
Most buyers pay a buyer fee; this can be anything from £500 upward.
How do I find out about property auctions?
The British Landlords association publish a list of all the property auctions in the UK, visit our website and register with the relevant auction house.
Can you mortgage a auction property?
Yes, you can, do depend on o your status, etc., you will need to act quickly if you want funding to buy from a property auction.
How can I secure a mortgage before an auction?
If thinking of buying a property from a property auction, then you ought to consider obtaining a mortgage in principle. Once you have this in place, all you should require is a valuation once you find a property. See legal advice and seek advice from a financial advisor.
What are the advantages of buying a home at auction?
Buying from a property auction house is quick, and you should be able to buy a property that should be cheaper than what you would pay on the open market.
What are the risks of buying a house at auction?
Recently in the last few years property fraud has gone up, ensure you buy a property using a solicitor and that your solicitor has had ample time to do the necessary checks before bidding.
In some very rare instances, even using a solicitor may not save you from falling into the hands of fraudsters. One of the key points to limit the risk is to buy a property that has been owned by the same seller for a few years.
Author: Simon Hampton [email protected]
Source: British Landlords Association
The British Landlords Association is a free national landlords association, join us today for FREE!
Date: 18th of October 2020
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