Understanding Property Auctions
Property auctions offer a faster way to buy a house compared to traditional methods. At auction, you can purchase a property immediately if your bid wins, with completion typically occurring within 28 days. This eliminates the uncertainty of property chains and reduces the risk of deals falling through.
Auctions are particularly useful for finding unique properties, renovation projects, or homes that might be undervalued. However, they require thorough preparation and quick decision-making.
Key point – Unlike standard property purchases which can take months, auction sales are legally binding once the hammer falls (or when the online timer ends) – meaning no gazumping and a guaranteed timeline.
Types of Property Auctions
Traditional In-Person Auctions
These are held at physical venues where bidders gather to participate in live bidding led by an auctioneer.
Online Auctions
Increasingly popular, online auctions come in two main formats:
- Live-streamed auctions – Traditional auctions broadcast online where you can bid in real-time from anywhere
- Timed online auctions – Properties are listed for a set period (often 14-30 days) with bidding closing at a specific date and time
Online auctions offer greater accessibility and convenience, allowing you to participate from home or even while travelling.
Before the Auction
Research and Viewings
Before attending an auction, you should:
- Get familiar with the auction process by attending a few as an observer
- Sign up for auction house catalogues to receive property listings
- Arrange viewings for properties you’re interested in
Most auction houses publish catalogues several weeks before the event, giving you time to research and view properties. Always view a property before bidding.
Property Due Diligence
Thorough research is essential when buying at auction. The legal pack provided by the auction house contains crucial information about the property, including:
| Document | What to look for |
|---|---|
| Title deeds | Check for any restrictions or covenants that might limit what you can do with the property |
| Local authority searches | Identify any planning issues or road schemes that might affect the property |
| Fixtures and fittings list | Confirm what’s included in the sale |
| Property information forms | Details about boundaries, disputes, and other important information |
| Leasehold information | Check lease length and service charges if applicable |
For most auctions, legal packs are available for download from the auction platform. Have a surveyor inspect the property to identify any structural issues or necessary repairs. Getting a proper survey could save you thousands in unexpected costs later.
Financial Preparations
Ensure your finances are arranged before the auction day:
- Secure a mortgage agreement in principle if you need financing
- Prepare the deposit (typically 10% of the purchase price)
- Have funds ready for the balance (usually due within 28 days)
- Budget for additional costs like stamp duty, legal fees, and survey costs
Speak with mortgage lenders who specialise in auction properties, as the quick completion timeframe requires special consideration.
Auction Day
Setting Your Budget
Decide on your maximum bid before attending the auction. Include all costs in your calculations:
- Purchase price
- Auction house fees (typically 2-3% of the sale price)
- Legal fees
- Stamp duty
- Renovation costs if applicable
Key point: Set a firm maximum bid and stick to it – auction rooms can be exciting environments where it’s easy to get carried away and spend more than planned.
Bidding Tactics
For In-Person Auctions:
- Arrive early to get a good seat
- Register with the auction house and get your bidding paddle
- Bid clearly and confidently
- Consider your position in the room – being visible to the auctioneer is important
- Stay calm and stick to your budget
For Online Auctions:
- Test your internet connection before the auction starts
- Familiarise yourself with the bidding platform interface
- Set up alerts or notifications for properties you’re interested in
- Log in early to ensure everything works properly
- Be aware of any auto-extend features that may prolong bidding
Many auction houses now offer multiple bidding options: in-person, telephone, proxy, or online bidding, allowing you to choose the method that works best for you.
After Winning a Bid
When the hammer falls, you’re legally committed to purchasing the property. You’ll need to:
- Pay the deposit immediately (usually 10%)
- Sign the contract
- Arrange insurance for the property from that day
- Complete the purchase within the timeframe specified (typically 28 days)
For online auctions, you’ll typically receive confirmation via email with instructions for payment and completion. Work closely with your solicitor to ensure a smooth completion process.
Risks and How to Mitigate Them
Auction properties come with risks that can be managed with proper preparation:
| Risk | Mitigation |
|---|---|
| Unforeseen repairs | Get a thorough survey before bidding |
| Legal issues | Have a solicitor review the legal pack |
| Financing problems | Secure funding before the auction |
| Overpaying | Research comparable properties and set a firm budget |
| Short completion timeframe | Have all your finances and professionals ready |
Key point – If you fail to complete the purchase after winning the bid, you could lose your deposit and be liable for the resale costs if the property sells for less at a later date.
