A simple checklist to help you buy property at auction
Buying a property at an auction could not only help you secure a better price but it’s also usually faster than buying on the open market. However, the process is different and there are several points you should be aware of before you get involved in property auction:
1. Do your prep
The auction catalogue (a list of the properties) for sale will be released around 2 weeks before the auction. We recommend that you review and identify any properties you are potentially interested in as soon as possible so you’ve got time to thoroughly check them out before the auction.
Once you have found a property or properties you are interested in, we recommend that you do the following:
- Visit the property
- Ask a solicitor or conveyancer to review the legal pack (please give as much notice as possible)
- Arrange a survey
2. Have the money!
With a property auction you have to have your finances worked out before the auction.
You’ll need to pay a 10% deposit on the day and you will then (usually) have 20 working days to pay the balance to finalise the purchase. However, you must always check the Auction Contract as sometimes the balance will be required more quickly and if you do not pay the balance by the required date, you’ll be at risk of losing your deposit and may also have to pay interest to the seller on the outstanding balance as well as any associated fees.
Please be aware that not all properties sold at auction will be considered eligible for a mortgage. So even if you have a mortgage in principle, there may still be a risk that your lender will not proceed with the mortgage if the valuation is not positive or if there is a significant defect in the legal documentation.
3. Take ID
Most auction houses now require evidence of your identity on the day of the auction so you need to take a photo driving licence or passport with you.
4. Be aware of the extra costs
Auction houses usually charge you an admin fee if you are successful at the auction. The fee will normally be a fixed amount rather than a percentage of the sale value but be aware, some auction houses will also charge you a percentage of the sale value as a separate ‘buyer’s premium’.
You also need to be mindful that some sellers will specify in the Auction Contract that the auction fee and the cost of their conveyancing will also need to be covered by the buyer.
5. Bid aware!
Set yourself a hard limit on how much you are willing to bid for a property before the auction and try and stick to it. If you cannot attend the auction, don’t worry as often the auctioneers will allow telephone bids (subject to prior notice and the auctioneers’ terms of business).
For any questions or further information on auction processes, please contact Linda Gregory at email@example.com or call Linda on 0114 290 6210.