Short guide to buying auction property
Buying a property at auction is actually very simple and can take only a few minutes! However, the key to buying at auction is being well prepared. If you are the successful bidder when the auctioneers hammer comes down then its time to get your cheque book out as the deal is now binding.
Get the auction Catalogue
This will list the Lots with descriptions, photographs and a guide price.
View the property
If you wish to view the property internally then arrangements can be made through the Auctioneers but you need to do this prior to the Auction Day.
This is literally a guide and properties can sell below or above this figure.
Each property has a reserve price which is kept secret. The Auctioneer cannot sell a property where the reserve price has not been met.
The Sellers Solicitor will prepare a Legal Pack for each property. It will contain:
- Memorandum of Sale
- Special Conditions of Sale
- Local Search
- Land Registry Search
- Copy of any leases
You can normally view a Legal Pack for free by visiting the Auctioneer or it will be available on the day. You can also request a copy to be sent to you for a small charge.
Advise your Solicitor
An auction property purchase needs to complete quickly so ensure your Solicitor is happy and able to accommodate this. Give them the property details you will be bidding on so they can make the necessary legal enquiries prior to the auction day. You should bring your Solicitors details along to the Auction.
Buying a property at auction involves a binding contract. If you are the winning bidder you will have to buy the property within a prescribed timeframe. All finance and mortgages need to be pre-agreed to save time, with property surveys completed prior to the auction day. If these are not done you run the risk of not being able to meet the 28 days completion deadline. An alternative is bridging finance which is a special facility that provides property purchase funds very quickly. Auction bridging finance is a short term funding option and you will need a re-finance alternative should you wish to keep the property long term.
If you are bidding on a property it will be assumed that you are happy with all aspects of the lot including the physical condition. Arrange for surveys to be done well in advance of auction day.
Once your bid has been accepted it is your responsibility to arrange insurance for the property.
The day before the auction
Ring the Auctioneer to check if the property is still available or whether there have been any amendments.
The day of auction
Allow plenty of time to get to the Auction and find out where you need to go. Register as a bidder if you have not already done this. Important information regarding lots is often given out at the start of the auction.
Firstly, make sure you are bidding on the right property and lot number! Catch the Auctioneer’s eye and signal clearly, raising your eyebrows or scratching your ear only works on TV shows. Have a budget in mind so you don’t pay more than you need to.
Congratulations, the property is now yours. You will now need to provide a deposit by cheque on the day of the auction, generally this is 10% of the purchase price but the Auctioneer will confirm what is required.
Proof of identity and ID
The Auctioneer needs to comply with Money Laundering Regulations so check which documents you need to bring with you. Typically this will be a Passport, Driving Licence, current utility bill or bank statement.
If you are still interested then register your details with the Auctioneer who will pass your offer on to the Seller.
Bargains can be found at auctions but always be prepared with an adequate amount of research beforehand and always discuss your intentions with your Solicitor. We have provided this guide in good faith to give an overview of property auctions but cannot be held liable for any action taken based on its content.
To discuss your auction finance requirements please call us on 0800 316 5756
Please note that the Financial Conduct Authority do not regulate commercial loans or commercial mortgages