Buying a property at auction

As property prices stretch out of reach more buyers are turning to auctions to pick up a bargain. Auctions are no longer the preserve of experienced landlords and investors. Increasingly, first-time buyers and those further up the ladder are wising-up to the benefits of buying at auction.

But novices should tread carefully. Melanie Bien at Savills Private Finance in central London, says: ‘Do as much research as you would if you were buying property that wasn’t being sold at auction. That means view it, get a survey done, arrange your financing and think about how much you can afford to pay.’

Auction houses will organise open days when you can go and view the property on a certain date. These will be detailed in the salesroom catalogue. You might also want to consult a builder about the costs of any work if a property is in need of renovation.

Sort your finances out well in advance of the auction. If your bid is successful you will have to put down a 10% cash deposit on the day and then you will usually have 28 days within which to complete the full sale. This could be too short a time to organise a mortgage, so put the ball in motion early. If you miss the 28-day deadline you will lose your deposit and the sale. Buyers don’t have to pay auction fees.

The main advantages to buying at auction are that you will usually get a good price as the properties on offer tend to be cheaper than those on sale with estate agents.

An auction also takes away the hassle and delays associated with home purchase.
‘There is no risk of being gazumped,’ says Bien. ‘Once the hammer comes down on your winning bid, neither you nor the vendor can pull out and the vendor can’t accept higher offers from other buyers.

‘It all happens quickly,’ she adds. ‘It will all be completed in a month, unlike the traditional home buying process which can drag on for months.’

The downside of buying at auction is that you cannot change your mind after the hammer falls. It is essential you know that you want a property before you start bidding because after a sale there is no turning back.

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