Home > Types of Auction > Buying a Residential Property at Auction

Buying a Residential Property at Auction

By: Chris Nickson - Updated: 26 Sep 2012 | comments*Discuss
 
Auction Residential Property Auction

Buying a house or flat at auction can be a cheap way to get on the property ladder or to increase your holdings. It works the same way as any other auction – the highest bidder secures the property. But there’s a lot more you need to know and preparations you have to have in place, before you start bidding. You can secure a bargain – but you need to know what you’re doing first.

Before You Buy a Property At Auction

Before you even look at specific properties, attend a couple of property auctions to see how they run and get a feel for things. Once you do find a property you like that’s coming up for auction, you’ll need to make your preparations. Arrange a viewing (don’t even think of buying a place you haven’t seen!). There’s a good chance the place will need work, so you’d better arrange to have a builder come along, and the house will also need to be surveyed. You’ll have to pay these people from your own pocket, and take on board their advice before deciding how much you’re willing to bid.

Getting Mortgage And Solicitor Before Buying an Auction Property

Something else to consider is that before bidding, you’ll need to have all your financial and legal ducks in a row. That means having your solicitor check there are no legal problems with the property you want to bid on, and a mortgage in place before the day the auction happens, and be able to offer proof in writing. You’ll also have to pay a valuation fee, and remember, all this must be done before the auction even begins.

At The Property Auction

You’ll have to register as a bidder, with proof of your financing in place (or cash, if you’re lucky enough to have that much). The main thing to remember when bidding is not to let yourself get carried away. You’ll have had advice from the surveyor and builder, and you know your mortgage amount. Calculate the maximum price you can pay and don’t be tempted to go beyond it, because the results can be catastrophic.

Another thing to remember is that even if you don’t have the winning bid, you’ll still have to pay the mortgage application fee, the valuation fee, the solicitor’s fees, the surveyor, and so on. These abortive costs, as they’re known, which can run into several hundred pounds, accrue each time you prepare to bid on a house, whether you win it or not. The chances are that you won’t be successful the first, or even the second time, so be prepared.It’s good advice never to make the first bid, no matter how eager you are. If no one bids, the starting price will be lowered. After that, feel free, but never go above the limit you’ve set yourself.

When You Win The Auction

If you win the auction, you’ll be expected to pay a 10% deposit immediately (usually by banker’s draft) and exchange contracts, with the balance due within a set time (which is usually 28 days). Here’s why it’s important to have your financing in order: If you fail to pay in the time, you’ll find yourself the recipient of a breach of contract suit, and, even worse, be liable for the difference between the amount you agreed to pay and the price for which it’s re-sold.

If you have everything lined up properly, and beat out the professionals for the property, keeping within your budget, you’ll find you’ll have bought yourself a bargain, often at much less than the market price.

You might also like...
Share Your Story, Join the Discussion or Seek Advice..
Why not be the first to leave a comment for discussion, ask for advice or share your story...

If you'd like to ask a question one of our experts (workload permitting) or a helpful reader hopefully can help you... We also love comments and interesting stories

Title:
(never shown)
Firstname:
(never shown)
Surname:
(never shown)
Email:
(never shown)
Nickname:
(shown)
Comment:
Validate:
Enter word:
Topics
Latest Comments
  • Cooper
    Re: Consumer Law and Auction Goods
    I bought 3 Gold pins from a Online auction house, when they arrived only 1 was gold the other 2 were gold plated, auction house…
    12 August 2022
  • Jacko53
    Re: Consumer Law and Auction Goods
    I spoke with a well know Military auction house about selling some of my military badge collection and told them that I was…
    27 May 2022
  • Fartgas
    Re: Auction House Commissions
    I agree strongly with the last 2 comments, maybe we need to start a petition?
    3 October 2021
  • Maboza
    Re: Auction House Commissions
    I view the charges as legalised theft, extortionate plus VAT, simply ridiculous.
    3 October 2021
  • sherms
    Re: How to Set a Reserve Price in an Auction
    I recently purchased a number of items from an online auction (auction house up North) and bought numerous items…
    5 August 2021
  • Angry1
    Re: Consumer Law and Auction Goods
    My neighbouring Methodist chapel was put on the market and bids invited for the purchase by local Estate Agents. My bid was much…
    25 May 2021
  • Biggy
    Re: Consumer Law and Auction Goods
    I bought a land with planning permission at online auction from a popular auction house and 3 weeks later found out there's…
    15 May 2021
  • Brian
    Re: Consumer Law and Auction Goods
    I purchased a 53' dry van trailer at a online auction. The company never disclosed the trailer had a leak and both side ways…
    3 May 2021
  • Roni
    Re: Consumer Law and Auction Goods
    I purchased items from global auctioneers. I asked for appraisal. Whilst there appraisal wasn't very useful it didn't give me…
    3 April 2021
  • Maz
    Re: Selling Collectibles
    I have completed set of lotr castle unopened and other characters
    26 March 2021