Buying property at auction

Property auctions provide buyers with competitive prices, transparent processes and quick transactions. It is making them a top choice among buyers.

Auctions are an efficient and rapid means for property acquisition at a bargain price. But thorough research must be conducted first before any bids are placed at an auction.  

Let us guide you through the process of buying property at auction in more detail. We will give you a few tips for your auction journey so you find your ideal property with ease!

Traditional auctions (also called standard auctions) tend to be preferred by experienced investors or cash buyers. They are less flexible and take place over a shorter time frame.

It involves buyers paying an initial 10% deposit and exchanging contracts as soon as the gavel drops.

Once successful bidders have exchanged contracts they are usually committed to complete within 28 days from winning the bid.

The modern auction gives the buyer more time and flexibility compared to the traditional option. It runs online and usually for a duration of 30 days.

Modern auctions typically charge buyers a reservation fee of approximately 5% when their winning bid is accepted.

They are followed by exchanging contracts 28 days later and completion 28 days thereafter (56 total days for completion).

Are you buying property at auction for the first time? It will likely be an unfamiliar and possibly intimidating experience. With proper research and an understanding of its processes it could prove rewarding and exciting.

Therefore, preparation and due diligence are of utmost importance when buying at auction.

Check the property before auction day. You could use the help of an expert like a surveyor, architect or builder. It will ensure that everything is in order.

Do not hesitate to schedule as many viewings as necessary. You want to feel completely at ease with the property.

Before you can agree to a purchase, the required funding must be in place either with an agreed mortgage or cash.

If you are planning to buy with a mortgage, you can ask your lender for a Decision in Principle (DIP). 

You'll need to explain to your lender that you are planning to buy a property at auction. Some lenders do not offer mortgages for auction properties. 

Depending on the auction type, you should also have access to your deposit. It usually is 10% for a traditional auction or a 5% reservation fee at a modern auction instead.

Check on the local property market. You want to know what a fair price is and have a good understanding of the property worth.

You can find current and historical prices of properties on the UK house price index website.

Be sure to have a conveyancing solicitor review the auction legal pack of the property. He will scrutinise any fine print.

The legal pack contains key information about the property. It includes documents like the title deeds, land registry and local searches, property forms and others. 

Ask a lawyer to review your pre-auction legal package. This will give you advice on any potential legal issues.

For traditional auctions, consider scheduling a survey promptly. Don't wait until after winning the auction. It may leave you unable to withdraw if any issues are discovered later.

Once registered, you may have to pay a reservation fee or non-refundable deposit.

Depending on the auction, the bidding can happen in person or online. You can also give your maximum bid and the auctioneer will bid on your behalf.

If successful, swiftly pay the deposit and complete your purchase within the specified timelines. These will vary depending on the auction type.

Your solicitor must now complete any applicable mortgage formalities. He will transfer any remaining funds to the seller and pay the Stamp Duty Land Tax.

Auction properties often fetch competitive prices. These prices often fall below market value due to bidding competition among buyers. It can also present potential bargains to buyers for undervalued or distressed properties.

Auctions provide an expansive range of residential homes, commercial buildings and investment properties. You can find properties suitable to every taste and investment goal imaginable. Auctions give bidders ample choice that best meets their preferences and goals.

Auction processes offer transparency and are designed with full disclosure in mind. Auction dates, terms and conditions are outlined prior to each bid. It maintains fairness and clarity for all involved.

Once the hammer drops, transactions tend to complete in short order compared to traditional sales methods. It offers buyers faster pathways into ownership of property.

Navigating the auction process can be exhilarating yet daunting.

You want to maximise your chances of success to secure your desired property at auction. It's essential to approach bidding with strategy and preparation.

Read 4 essential tips for auction day to help you maximise your chances of success.

Set a budget and stick to It  

One of the key steps of bidding at auction successfully is setting and adhering to a budget in advance. 

Set your maximum purchase amount, including additional costs such as buyer's premium and legal fees. 

By adhering to your budget, you can ensure a financially responsible purchase.

Attend auctions to gain experience

Attend auctions as an observer before becoming an active bidder. It can give you helpful experience and insights.

This firsthand experience will leave you more prepared and confident when bidding on real estate!

Avoid emotional bidding

Diving head first into an auction can be exciting. But to remain level-headed, avoiding emotional bidding is essential.

Remember that ultimately what matters is making the best possible financial investment decision. Avoid emotional impulses

Conduct thorough due diligence

Before bidding on a property, conduct extensive due diligence. It will allow you to assess the property condition, legal status, and potential risks. 

Review property documents and obtain surveys and inspection reports. You can also seek advice from legal and financial experts as needed. 

The more informed you are about the property, the better equipped you'll be to make strategic bidding decisions.

One risk is the lack of time for thorough due diligence. Properties are often sold "as-is," without warranties or guarantees. 

In addition, buyers may encounter competition from other bidders. it will lead to higher prices than anticipated. 

There's also the risk of overpaying or purchasing a property with hidden defects or legal issues. 

Moreover, a buyer might fail to secure financing or complete the purchase within the specified timeframe. As a result they risk losing their deposit and facing legal consequences.

To mitigate these risks, buyers should conduct extensive research and seek professional advice from a solicitor. They should also make sure to carefully review the auction terms and conditions before bidding.

Are you ready to explore the world of auction property purchases? Our experienced team offers personalised service and supports you every step of the process.

Let us support you on the auction market so you can secure your dream property with confidence.

Call us on or request a call back and our friendly team will be happy to help!

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