Property auction home >> Property auctions articles >> Tips for buying property at auctions

Tips for buying property at auctions

If you really wish to succeed in buying properties at an auction, you will have to be alert and do your homework. Please understand that auction houses that hold regular auction sales get ready a printed catalogue some weeks in advance. In order to get these catalogues, it is advisable that you subscribe to their catalogue mailing lists. You must enquire why the property is on sale at an auction. Is it because the owner wants a quick sale or has the property been repossessed by a mortgage lender?

If you are a beginner, make it a point to attend a couple of auctions and familiarise yourself with how things work. Most auctions are tricky and a few trial visits will ensure you know exactly what you are doing when you start actually bidding. Each auction lot will have a corresponding auction pack that will contain the title deeds, local authority and environmental searches, fixtures-and-fittings list and a seller's information form. If it happens to be a leasehold property, it will include a copy of the lease and details of service charges and ground rent.

Apart from the legal checks, you will have to compulsorily visit the property and know its condition. As with any house purchase, study the location to find out about availability of shopping facility, school in the vicinity, access to public transport etc. Before attending the auction, it is crucial you know what you are buying. Many auction lots are properties that need a lot of repairs or have structural problems for which you will have to pay. It is preferable to get a survey done before you bid at the auction.

In an auction a reserve price is usually fixed for every property. If bidding does not reach this price the property auctioneer’s hammer falls, and it means you are the successful buyer. If this happens, it is important to know you are legally committed to paying the price you bid. The rule is you have to pay 10% of the cost of the property immediately before you leave the auction room. The balance has to be paid in full - and the purchase completed - within 28 days. So make doubly sure you carry the money you need for the deposit and the rest arranged with a mortgage lender who can complete the transaction within the stipulated 28 days.

Before attending the auction, it is crucial you know what you are buying. Many auction lots are properties that need a lot of repairs or have structural problems for which you will have to pay. It is preferable to get a survey done before you bid at the auction. While working out your budget, you must take into account the cost of surveys and fees for legal advice. At the presently prevailing rates, you will also have to pay 1% stamp duty on properties costing between £120,000 and £250,000, 3% on properties costing between £250,001 and £500,000 and 4% on properties over £500,000.

Also, the auctioneer may demand a buyer’s premium equivalent to 1.5% of the sale price and there are instances of sellers demanding the auction fee and legal work to be paid for by the buyer. Be extremely careful and check the small print for all extra costs before you bid at the auction. Before entering the auction room, firmly decide on the maximum price you can afford. Never get emotionally involved bid above your budgeted price. Be composed and level-headed, and if you think you cannot avoid being tempestuous, get a solicitor or auctioneer to do the bidding for you.