How to buy property at auction

Whichever way you buy property, you need to understand what you're doing. That's why we at Homeward Legal have written you some legal tips for buying property at auction to ensure that you have all you need to know about property auctions.

When you buy property at auction, it is not just about going to the auction and placing your bid. There is a lot of preparation work which you need to do before the auction begins.

Do your research

Before you go to a property auction, you need to research local property to choose which local property auction house you wish to buy from. You will need to register with auction houses too to receive their regular property catalogues.

You should also research the property you wish to bid on as well as carry out any due diligence necessary. This is when a conveyancer will really come in handy, as they can assist you with searches and with the auction's property legal pack. You may even want to get a building survey done so you have a true picture of the property before the auction. 

You should also research the property price as the price in the guide is not always accurate. Instead compare with similar properties in the local area to get an idea of a fair price.

Once of the most significant differences between buying property at an auction is the speed of the sale so it is essential to be organised in advance. 

Arrange Viewings

Before you attend the property auction, do go and view the property you are interested in placing a bid on. You can do this by asking the auction house. and do not worry if you need more than one viewing. You could take along someone else with expertise to assist you such as a:

• surveyor
• builder
• architect

A property may be more run down than you realise so a viewing will reveal this. 

Ask questions and check the small print

You are likely to have plenty of questions before you attend a property auction so you should get these answered. Don't be afraid to ask the auctioneer about any queries you have. Also, ensure you check the small print in the auction house terms and conditions, particularly as you are legally bound to them once you place a bid. 

Check the Legal Pack

When you go to a property auction you will be provided with a legal pack. Before you attend, go through this to ensure you understand it. Don't forget to check the small print and try and get a solicitor to look at it to check for any significant sale conditions. Auction legal packs vary greatly between auction houses so you must familiarise yourself with yours. 

Some key points a  property auction legal pack should contain are:

• information on the property being auctioned
• specific conditions of sale such as payments and complete dates
• official copy of the register of the title, so the person who owns the property
• planning permissions
• land registry and local searches
• any leasehold, management and tenancy agreements
• fixtures and fittings form
• lease terms

Set your budget and sort your finances

Naturally, as with buying any property, buying a property at auction is going to set you back in terms of your finances. That is why it is essential that, before the auction, you decide what your budget is and ensure that your overall finances are sorted. This may mean ensuring cash is readily available or that your mortgage in principal is sorted out. If it is the latter, explain to the lender, you are looking for a loan for a property auction buy.   

When sorting our budget, you should be aware that whilst auction properties can be cheaper than other properties on the market, they often require renovations which you will need to budget for. Also, having finances sorted is crucial as the completion process can take as little as 28 days or so from the auction. Therefore, if you ask for a buy-to-let mortgage this will need to be sorted far in advance of the auction. 

Be prepared to act

Auctioned property sells fast so you need to be ready to act fast too. This includes before the auction - there are often only four weeks before the auction date that auction properties are published in the auction catalogue. 

Once you reach the big day, you need to continue to focus on all the legal aspects of buying a property at auction. We go through some of these for you. 

Arrive early and get ready

Punctuality is key. You should arrive at a property auction before the given start time as this will allow you to understand any extra information or changes which have been made to the property. Also, arriving early allows you to bagsy that perfect sport where the auctioneer can see and hear you.

Make sure you have all you need

When you attend the property auction you will need to have certain things with you such as:

• your paperwork which can include your mortgage AIP, or if you plan to buy in cash, proof you have the cash funds
• two forms of ID including  photographic ID so can include a passport or utilities bill

Be calm and clear when bidding

When you decide to bid on a property at a property auction, you may naturally get butterflies and feel nervous. However, It is important to stay calm at the property auction. You want to ensure you are clear and concise with your bid so you can be heard and understood by the auctioneer. Also, make sure they can understand that you are indicating to bid such as by clearly raising your hand. 

Each auction house has its own bidding process so be sure to understand yours.  You may also have a bidding strategy in mind so try to stick to this. 

Stick to your budget!

A property auction can be an exciting event so it can be difficult not to get carried away, particularly if you have your heart set on a property. However, it is important that you keep in control which means sticking to your budget. If you go over budget on the day this can be as significant as making money or losing money on a property. 

Don't forget the additional fees

When you buy property at auction, there are extra fees to take into account. You will have a buyer's premium or admin fee charged by the auctioneer which may be a flat fee or a percentage of the cost of the property.

The auction property may have fees attached to it and there may be fees relating to:

• the legal pack
• carrying out property searches
• other special conditions.

Have your deposit ready

If you do get lucky at the property auction and win the property you bid on, be sure to have your deposit ready to get things moving. This will typically be 10% of the final sale price.  You will need to pay this almost immediately after your bid has been accepted. Depending on the type of property auction, you will have a given time in which you must complete the sale but typically it is around four weeks. Also, before you complete the property sale, you may wish to get a  survey on the auction property.

Enjoy the experience (even if you don't win)

Last but not least, enjoy the property auction. You may not win, but the experience will be a learning curve. Also, if the property you had your eye on does not sell at the reserve price, the property owner may be willing to sell it at the highest bid once the auction has finished so you could ask them then.

At Homeward Legal, our mission is to make buying your property simple and as efficient as possible which includes where you choose to buy property at auction. Whatever your conveyancing needs, we can assist. Whether it is buying, selling or remortgaging, you are in safe hands with Homeward Legal. 

Let Homeward Legal help you with all your conveyancing news. Call today or send us a message here. You can also get an online quote here.

^{Last updated 08.11.23}