Whilst property auctions are exciting, they’re not for the faint-hearted, so you must go prepared. We take a look at how property auctions work, plus the pros and cons of buying a property at auction.
How do property auctions work?
Find your local property auction by searching online, or discover properties for sale at auctions via portals such as Rightmove and Zoopla.
Most property auctions release their catalogues around a month before auction and will include a guide price. If you find a house you’re interested in bidding on, make an appointment to view the property and visit more than once if possible.
Property auctions move quickly, so before you bid ensure that you have a mortgage agreement organised, have had a building survey completed and that Conveyancing Solicitor has reviewed the legal pack provided by the seller before auction.
Before making a bid, decide on your price limit and stick to it. Whilst you may lose the money you’ve spent on surveys and solicitors, this could be a drop in the ocean compared to spending thousands extra on a property.
To make a bid you don’t necessarily have to be in the room, you can bid over the phone or by proxy, where you set your maximum bid in advance, though often you’ll have to pay a 10% deposit on your maximum bid to do this.
If you make a successful bid then there are two ways to exchange and complete at auction. Traditionally auction houses require a 10% deposit straight after the auction, then you have 28-days to complete. More often though you pay a non-refundable reserve free on the property, then you have 56-days to complete.
- Speed - Unlike the traditional buying process, which can be slow, houses bought at auction can be completed within 28-days.
- Get a great deal - If you’re looking for a ‘fixer upper’ you can find some absolute gems at auction, at a fantastic price.
- Transparency - On auction day you can see all the other bidders in the room, with no pressure to get your offer in first.
- Being ready with your money - If you win at auction you’ll have to pay a deposit on the day and will only have so many days to pay the total purchase price.
- Less time for surveyors and solicitors - There is a relatively short window to arrange surveys and to check the legal pack of the properties you’re interested in, placing a lot of pressure on due diligence.
- You may be outbid - If someone bids higher than your budget, then you will lose the money you’ve invested on solicitors and surveys. It can also be very tempting to bid above your budget, but once the hammer falls, there’s no going back!
For advice on buying or selling at auction, or if you’ve seen a property you’re interested in bidding for, get in touch with the Conveyancing Solicitors at Hayward Moon who can review the legal pack and provide guidance on your purchase.