Purchasing a house through auction is becoming an increasingly popular way of buying property. With a wide selection of properties to choose from, a swift process and the potential to secure a bargain, it is no surprise that many people are opting for this method. However, it is important to note that there are some risks involved when buying through an auction.

The most important thing to do before attending an auction is research. Check out the many sites such as Rightmove and Zoopla for upcoming auctions, viewings and details on properties you may be interested in. Make sure that you have read all of the legal documents associated with the property, such as title deeds or leases, and be aware of any extra costs such as Stamp Duty Land Tax and conveyancing solicitor fees.

Additional auction costs

If you are successful in the bidding stage, you may need to pay 10% of the sale price on the day as a deposit. The remaining 90% must be paid within 28 days otherwise, you could lose both the property and your deposit. An administration fee to the auction house is usually between £200 and £300.

If your bid is successful, you’ll usually have to pay:

• 10% of the sale price on the day, as a deposit
• 1% - 6% in auction fees
• The remaining 90% around 28 days later – if you don’t pay this you’ll lose the deposit and the property
• An administration fee to the auction house – usually between £200 and £300
• Stamp Duty Land Tax
• Conveyancing solicitor fees
• Survey costs
• Buildings insurance

Auction properties

There are a few things to do before you enter the bidding war of an auction, such as a property survey, this is important because you won't want to be spending thousands of pounds on a house that has serious structural issues that you're unaware of at the point of purchase, as you will lose money.

You will need to register with the auction company and this is when you can start arranging viewings to go and see the property you will be bidding on. Also, arranging a mortgage in principle before the auction starts will benefit you as the purchase is only given 28 days to complete from start to finish, an experienced mortgage broker will be able to help with this. If you are a cash buyer then this part is a lot faster as there is no mortgage to process.

Your conveyancing solicitor will also need to work quickly to get this to completion within 28 days. All parties need to work together to ensure the completion of the property goes ahead successfully. Any documents you receive from the solicitor fill in and send those back as soon as you can. If the property doesn't complete in time, you may lose the sale and may also be charged additional fees on top of the standard fees payable that may be lost.

If the property has any problems or needs a big renovation, there is a way to fund this and purchase the property quicker by taking out a bridging loan. This is a short term loan typically used by investors, there are two types of bridging loans and they are available to anyone that meets the lender's criteria, for more information visit our page on bridging finance here

Online Auction

You will have access to a link which will take you to the website to start your bidding journey, you are able to see other people's bids and you can bid as many times as you want to. The online auction process usually lasts 21 days and bidding can go on for the whole 3 weeks, on the last day of the auction, people can bid right up until the very last second.

If you are unsure of how this works you can contact the auction company and ask them to explain the process to you so that you are fully aware of what's involved. If you choose to use an online only property auction which is a modern method used, then you will be best speaking to the auction company or the estate agent advertising the property, for additional information if needed.

Auction House

If you are attending an auction house which is the traditional method of bidding for a property then you need to be aware of how the process works. Most auctions will give you an auction catalogue, weeks prior to the auction taking place, each property will be listed with a guide price, and the reserve price is the minimum price the seller is willing to accept for the sale of the property.

If your bid does not succeed, it is still possible to make a private offer afterwards as the auctioneer often requests this from interested buyers who did not win at the auction.

Overview of property auctions

Overall, buying a property from an auction can be beneficial if you have done all of the necessary research. With the right preparation, you can secure a property that may not have been available to you elsewhere. If a big renovation project is what you're looking for then a property in the auction is ideal for you.

However, if you do not prepare properly or are unsure of any details regarding the property, it is best to consult a professional such as a mortgage adviser or solicitor before proceeding with your purchase of an auction property.

If you are interested in a property at auction and looking to purchase it with a mortgage contact us today at 0151 662 0188 or email [email protected]