With fuss-free sales and bargains to be had, there are many advantages to buying a house at auction — just make sure you know what you’re doing before bidding.
Before auction day
You need to find out what’s on offer and the best way to do this is by contacting local auctioneers and asking for catalogues. Alternatively, visit UK Auction List or Essential Information Group for listings.
Once you’ve found a property, act fast. There’s usually a month between a catalogue being published and the auction itself — and there’s a lot to do.
First, arrange a viewing and, if you’re planning work, take your builder too. “The idea of purchasing at auction is that a buyer has absolute knowledge of what they are buying so there is no uncertainty,” says Richard Watson, head of auctions at Knight Frank.
“Everything, including the searches, is provided by the seller so these should be reviewed by a professional on your behalf. The only thing which is not provided is a building survey, but if you wish to have one done then this can be arranged.”
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A legal pack is always published and your solicitor should look for any hidden costs and requirements before you bid. Once the hammer goes down, you’ve effectively exchanged, and you’ll need to pay a 10% deposit there and then.
For this reason, you also need your finances in order. It’s a common misconception that auctions are for cash buyers but this isn’t the case; you just need a "mortgage in principle" and evidence you can proceed.
“In order to register successfully, buyers will need to provide the auction’s team with the details of all bidders, buyers, deposit payers, identification documents and details of their solicitor,” says Chris Coleman-Smith, head of Savills Auctions.
Once registered, anyone can bid, including first-time buyers. “This group is well placed to take advantage of the process as they are not reliant upon a chain,” says Richard Watson.
Guide and reserve prices
Auction properties often look attractive because their guide price is so low, but it’s important to understand what this represents. The guide price is an indicator of where the bidding will begin, while the reserve price is the minimum the seller will accept. “Guide prices given are indications within 10% upwards or downwards of where the reserve price may be set at the time of going to print,” says Coleman-Smith.
When working out the final price you are willing to pay, make sure to include the auction house’s fee. “Have your figure in mind and stick to it,” says Richard Watson. “Naturally buying property is not an exact science, and its value is influenced by what it is worth to you.”
On auction day
It’s natural to feel nervous on the day itself but stay calm. “An auction is fast paced and so remaining focused is crucial when it comes to being successful," says Coleman-Smith.
"If you are able to visit an auction in person, make sure your bidding gestures are clear and consistent so that they don’t go unmissed.”
For anyone who can’t attend, there’s the option to bid via proxy or over the phone. Many auctions are now also live-streamed so you can still see what’s going on.
Modern online auctions
The global pandemic has transformed auctioneering by moving it online.
“COVID has meant even the most vocal in-room auctioneers have gone solely online and they have all said that the results for their clients have been the same. Indeed, regular sellers have not stopped selling which is the biggest seal of approval,” says Watson.
Just be aware, for online bidding, a reliable wi-fi connection is crucial.
Modern online auctions differ from traditional auctions in that they can give the buyer more time to arrange a mortgage following a successful bid. The reservation fee may also be considerably less — sometimes 4% — but it’s important to check the auction house’s terms and conditions beforehand.
After the auction
Whether bidding in-person or online, when the gavel goes down, you’ve signed a contract and have between 14 days and six weeks to complete. From that moment, you’re also in charge of organising buildings insurance. Auctions don’t fall under the consumer contracts regulations and you will not be protected by this law.
The advantage is there’s no gazumping — when a seller accepts a verbal offer on the property from one potential buyer, but then accepts a higher offer from someone else — or long chains, and everyone knows where they stand.
If you’ve missed out, don’t be disheartened. “Unsold properties after an auction may be listed with an available price,” says Coleman-Smith. “This is the price that the seller(s) are looking for post-auction.”