CHARTERED SURVEYOR APPROVED Buying a property at auction is a trade-off between risk and reward. The reward is that you buy a property quickly without months of back and forth between vendors and solicitors, and pay less than you would if it were on the open market. The risk is that you don’t do your research properly and end up with a property that has a structural or legal problem or get carried away with the bidding process and pay more than you intended.
The good news is that with the right preparation, you can mitigate the risks and make the whole process straightforward and hassle-free. Property auctions are not just for property investors and experts. With our quick guide to the property auction dos and don’ts, you can bid with confidence and get a great deal.
Carry out as much research on the property as you can so you can make an informed bidding decision. Once the hammer falls, that property is yours, so check everything out beforehand.
One reason people choose to sell properties at auction is because there’s an underlying issue, but there are plenty of problem-free properties, too. Your research will make sure there are no nasty surprises.
This is an important point that people often overlook. The auction legal pack contains searches and legal information about a property and details of the auction process. It’s available for prospective buyers to download online before every auction. It includes details of any legal issues the property has, such as:
One section to pay close attention to is the special conditions. It will include details of how long you have to complete, what fees you have to pay the auction house and whether any additional fees apply.
It’s also well worth going through the legal pack with a solicitor, as they’ll be able to spot the details you might miss.
Most people wouldn’t even think about buying a car or a new sofa without seeing it first, but for some reason, buying a property without a viewing is not that unusual.
Ideally, you should view the property with a builder who’ll be able to provide expert insight into any potential issues and how much they’ll cost to fix. And if you do have any questions, ask the seller’s agent as early as possible so they can provide you with a full response before the auction day.
A property might tick a lot of boxes superficially, but a professional survey will look a lot deeper. It will help you identify the sort of issues, such as subsidence and Japanese knotweed, that auction properties may sometimes have. You’ll also be covered by the surveyor’s indemnity insurance if there’s something they miss.
It’s easy to get caught up in the excitement of an auction and bid more than you should, which is why you should always set a firm bidding limit before auction day. When setting your limit, think about the market value of the property, the transaction costs, the cost of financing and how much any repairs or renovation work will be. It’s also a good idea to take a friend or family member who can rein you in.
Once you’ve decided how much you’re willing to pay, the next job is to think about how you’ll finance it. You can buy property at auction with a mortgage in principle or a bridging loan, but always make sure your financing is approved before the auction day.
Once the hammer does down, you’ll have to pay a deposit on the day. You’ll usually then have 28 days to complete the purchase. If you don’t get your financing approved before the auction, the funds may not be released in time and you could be charged interest or even be sued by the seller.
Eddisons’ property auctions team is one of the UK’s leading online property auctioneers. We have grown our offering through the acquisition of two of the largest property auctions in the North of England. Pugh Auctions were acquired in 2016 and in 2023 we added the capabilities of Mark Jenkinson.
You can find some great deals at auction, but cut-price properties can also have underlying problems that you can inherit. If you buy without visiting the property or getting a survey, you’re taking a huge gamble that may not pay off.
If you were buying a property on the open market, you’d typically have dozens of questions for the selling agent. These are the same questions you should ask before the auction:
You must be certain about what you’re buying before you make a bid. The last thing you want is to end up with a property but still have unanswered questions.
Some of the properties sold at auction need varying degrees of renovation work. This is an opportunity for the right buyer as it allows you to add value and put your own stamp on the place. Do your research on the likely costs and factor them into your financial calculations.
If you see a property you like then instruct your solicitor as early on in the process as you can. They’ll be able to investigate the property and identify any legal issues or restrictions that could affect its value or your ability to sell it. Do this before the auction as you won’t be able to query any legal issues after a successful bid.
If you do your research, set a bidding limt and listen to the advice of the experts, there are some great deals to be had when buying property at auction. If you have any more questions, please contact our property auction experts who will be more than happy to help.
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