Guide buying from a property auction
This Guide Will help you learn 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. 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’s full list of all the UK property auctions here.
You can check the value of the house or flats you are interested in using Zoopla or Rightmove to get a reasonable idea of the average price of a property.
You can also visit the website nethouseprices to 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 and the exact property you are interested in at an auction house.
- Arrange viewings and ask questions
You must go and see the property before bidding and take a builder friend with you, someone with building experience. If the property needs to be updated, at least you will know 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 in this property, etc.
- Auction particulars
Nearly all auctioneers publish brochures, and they are also available online. However, 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” and download it. The legal pack is usually free and vital to buying from the property auction house.
- Check regularly on any updates
It is common for a property’s particulars to be amended and the guide price adjusted, so you should keep checking and speaking 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 Sometimes a property maybe is withdrawn or sold before the auction, so recheck the day before the auction date to avoid disappointment.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 tempting to offer just a tad more, and before you know it, you have paid too much. It is very easy to get carried away when bidding; it is important to be disciplined. Having a close friend or family member with you when bidding can help.
Check the Auction small print
Each auction house functions differently, and its terms and conditions and working methods vary. You must check the terms and 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 a 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.
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 a guide and a 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 price is rarely the same as the reserve price. On average, it 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
Most, if not all, auction houses operate online bidding. You must 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.
- 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 for 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 must be processed well before the auction date.
- Read the auction T&Cs before the gavel falls
Before bidding, you must ensure you have read the terms and conditions, including special conditions and the legal pack. If the gravel falls and you win the bid, you are legally bound in contract to the purchase.
You cannot then raise any requisitions later.
Before bidding, it is essential that you seek legal advice on the legal documents related to the property you are buying and the legal documents relating to the auction house, too.
- Make sure you have the 10% deposit
Upon successfully winning a bid, you are immediately required to pay a 10% deposit towards the purchase price. Note most auction houses also charge a buyer fee. You must carefully check the buyer’s fee before bidding.
AUCTION FAQ
If a property is unsold, can I buy it privately?
Some lots are not sold, and these can sometimes be rich pickings. You can speak to the auctioneer and offer the guide price, 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 that you have all the tenancy and all tenancy-related documents from the landlord.
Buying an investment residential property from a property auction carries risk, and you must be aware of the risks.
British Landlord Association members can seek free legal advice from the member’s helpline if they buy from an auction.
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 property auction house website guidelines.
How to buy a house at an auction?
Every property auction house operates differently. You must check the documents and guides on the property auction house website. This Guide will also give you some tips and guidance.
How much does buying at auction cost?
Each auction house has various fee structures, so check the property auction house website before you proceed. If in doubt, email the auctioneer and seek clarification on any issue you are unclear on.
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 publishes a list of all property auctions in the UK. Visit our website and register with the relevant auction house.
Can you mortgage an auction property?
Yes, you can. It depends on your status, etc. You must act quickly if you want funding to buy from a property auction.
How can I secure a mortgage before an auction?
If you are considering buying a property from an auction, you should consider obtaining a mortgage in principle. Once you have this in place, all you should require is a valuation once you find a property. Seek legal advice and seek advice from a financial advisor.
What are the advantages of buying a home at an auction?
Buying from a property auction house is quick, and you should be able to buy a property cheaper than what you would pay on the open market.
What are the risks of buying a house at auction?
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 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 media@thebla.co.uk
Source: British Landlords Association
The British Landlords Association is a free national landlords association, join us today for FREE!
Date: 18th of April 2024
Related Blog: How to pick up a bargain from a property auction
Disclaimer:
This post is for general use only and is not intended to offer legal, tax, or investment advice; it may be out of date, incorrect, or maybe a guest post. You are required to seek legal advice from a solicitor before acting on anything written hereinabove.
