Property Auction House & locations to buy
If you are looking to buy at an auction, you probably know the location you want to buy in. If you are buying for purposes of but-to-let, then your scope could be broader.
Some may want to buy a property, do some work and sell it on. If this is the case, then it is worth considering selecting a wider area. That way, you could choose a few lots, and you stand a reasonable chance of picking up a bargain.
Search for property auctions for that area
No matter what location you have your sights on, you will always have an auctioneer that covers the location you are interested in. You have local auctioneers, and you have national auctioneers. National auctioneers can have up to 200 lots per auction.
Tip: If you see a property that you like in a national auction and its not in London, say its in Liverpool. You may get a better buy than you would if the same property were with a local Auction House. Auction houses like Barnard Marcus, Allsop, Strettons and Harman Healy are national auctioneers, and the auctions are held in London.
For example, local investors in Liverpool may not be keen to travel to London and Londoners, may not be interested in Liverpool. Liverpool is only an example.
Many who wish to buy prefer to attend an auction in the flesh; the transaction is far too important to rely on technology. Attended a property auction has its advantages as you will see as you read on.
Download the property auctioneers’ catalogue
Nearly every auction house has an online catalogue. I would suggest you download this, take your time going through it. Mark appropriate information on any lot you like. Do some basic research on the lot you fancy.
Chose an auction lot to bid
Once you have chosen a lot, great let us go through what you should do next. Initially do not waste your time or money to view the property you like. Go on Google street view and check out the street and general area. Check the map. See what is next or near the property by using online resources.
Note, property auctions have some lots that owners or banks struggle to sell. If the lot you like is one of those, you want to check online, google street view, google maps to see what the problem is.
Tip: You need to check what the property is worth; you need the check if that location is good or bad. Visit nethouseprice, put the postcode in of the lot you like. This website will show you all the properties sold on that road/street or location.
Check to see the number of transactions where people have sold properties on that road, what is the frequency?
If the frequency of properties transaction is high, then do some homework, why is this the case?
Check the property you like on nethouseprice and see (1) the frequency of the properties sold (2) Check how much it was sold for and also check other properties sold nearby to get a good indication what the property may be worth.
Ring the local agents speak to them ask them about the location, the street and that address.
You may be surprised what information may be revealed.
Arrange a viewing of the lot you like
Make sure you turn up to the viewing say 15 minutes early. See how many other people turn up to view. Stay to the end.
Check the property thoroughly, take a builder friend with you to get an opinion should you see cracks in the walls or other things which look costly to put right. Walk around the area afterwards, speak to the neighbours. If you can talk to the neighbours that could prove to be valuable.
Make an offer before the auction
If you like a particular property, there is no harm making an offer before the auction. You have nothing to lose. Currently, the property market is less than flat; auctioneers will be keen to put an offer to the seller.
Tip: Do not show that you are too keen on the property. On making the offer inform the auctioneer, you need to know within 24 hours as you have other properties you are looking at.
The auctioneer needs to think if the offer is not accepted, you may buy something else before the auction date. Auctioneer knows the risk the property may not make more than what you are offering.
Checking the auction legal pack
Soon as you have selected a lot you like, download the legal pack. You will need to register online with the auctioneer. Once you have downloaded the legal pack, check if it is complete or is the seller going to upload any other documents. Contact the auctioneer to check if the legal pack is a full version.
Auction legal packs should consist of all the standard legal documents your solicitor will needs. If all is well and there are no adverse entries on the title deed.
Do not instruct a solicitor until you have read the legal pack yourself first. Sometimes you may see something glaring at you, even as a layperson, and it may be enough for you to step back.
If all seems well to your eyes, then instruct a solicitor as soon as possible so they can check the legal pack and advise you accordingly.
Consider getting a survey done
It is worth getting a survey done, try using a local surveyor, they will know the area a lot better than surveyors who are not local. Always use a surveyor that is RICS.
Make sure you have the money to buy at auction
If you want to go the property auction, just to see how property auctions function, all good and well. However, if you are buying, then make sure you have the funds before you go to the auction.
You are required to pay a 10% and also possibly auctioneers fee too. Should you not complete on the purchase you will lose your deposit, and the auctioneer’s fee is not refundable. Technically the seller may be able to sue you for any losses, in addition, to the deposit you have paid.
Act swiftly when buying from a property auction
When you buy from a property auction, upon the gravel going down you exchange contracts. The next stage is completion. Completion can be 14 days or 28 days.
A lot needs to be done before the auction date, and after exchanging contracts, you need to inform your solicitor you exchanged on the property. You should have already engaged solicitors, before attending the auction, so that the legal pack can be checked.
Keep checking for updates for the lot you want
Sometimes lots are withdrawn, other times some legal issue has arisen. It may be further documents have been added to the legal pack or amendments to the sale conditions (an ‘Addendum’).
Set your budget, stick to it
Set a price you are willing to pay, stick to it; it is very easy to bid a bit more, a bit more, before you know it, you have exceeded your limit. Do not lose focus on the work that may be needed, the cost of work, and other fees and deposit you need to pay.
Check the Auctioneers Terms & Conditions
Each auction house T & C’s are different, ensure you read the terms & Conditions and other auctioneers’ documentation. As already stated above, keep checking the online legal pack to see if it has any further documents. Also, check the lot has not been withdrawn before you go to the auction. It is not unusual for lots to be withdrawn.
Check if the auctioneer is regulated
You should check the auction house you intend to use is NAVA Propertymark Protected this will give you peace of mind that you are dealing with a qualified professional.
Make sure you attend the auction before it starts
You should attend the auction before it starts, the auctioneer will go through some important information and announcements. There may be additional information or changes to a property ‘Addendum’.
Guide and reserve price are not the same
You need to understand the guide price set by the auction house is unrealistic; it is set to generate interest. It is not what the seller is likely to accept.
The reserve generally is about 10% higher than the guide.
Bidding against the wall
If you are not a seasoned property dealer, then you are unlikely to be aware sometimes the auctioneer is bidding against the wall. This means there are no bids; the auctioneer is randomly pointing to non-existent ghosts.
Those interested in a property, some just want to see what happens, before they step in and start bidding. So the auctioneer warms up by bidding against the wall.
Tip: Stand right at the back wall in the auction room. See what is happening. See who is really bidding.
When the auctioneer asks for a bid, you start the bid, bid low. That way, you have helped the auctioneer. You never know, there may not be anyone else bidding, and the auctioneer knows at least he has one real live bid.
If you cannot attend the auction, alternative options to bid
If for any reason you cannot attend (coronavirus comes mind) you can bid by various methods. Check the auction house guidance and speak to the auctioneer. They usually have online bidding, proxy and other methods too.
Insure the property if you win the bid
When you check the legal pack, you may note if you win the bid upon exchanging you may be required to insure the property. It may be worth getting a quote for building insurance and keeping the quote reference. After exchanging you can then insure the building rather than panic on the day.
If you win the bid, then what happens
Just to recap if you win the bid. You are required to immediately exchange contracts, pay the 10% and pay the auctioneers fee. You will require your solicitors contact details etc. Completion is likely to be in 14 days or 28 days. Read the auction house guide what I.D and documents they need should you buy a property through them.
Unsold property buy at by private treaty
Tip: If the property you like is not sold, immediately go to the auction house staff and inform them that you bid on a lot and it did not sell. The auctioneer will try to get as much as they can for the lot, just be a good negotiator.
You will see other property traders do the same for other lots too.
List of all property auctions throughout the UK. Book mark the auction list page for future
Source: British Landlords Association
Author: Marc Attwater
Date: 22nd of March 2020
The British Landlords Association – The BLA is a free national landlords association. Join us today!