Buying at an auction can be a great way to find affordable properties bursting with potential.
Not only is this property-buying pathway an attractive route for investors and developers, but it’s picking up popularity across the UK.
Regardless of whether you’re searching for your first family home, an investment property with HMO potential, or simply want to find out more about how buying property at an auction works, the knowledgeable team at Mistoria Estate Agents can help.
Before we dive into the intricacies, costs and processes involved in bidding on a property at an auction, we explore the benefits and common pitfalls of purchasing a house at auction.
We’ll then take a closer look at how these auctions work to help you bag a bargain!
Why buy a house at auction?
Quick – Typically, the entire process of buying a house at an auction is completed within 28 days afterwards. While the number of days until completion can change, it’s still often much faster than the traditional process of buying a home.
Transparent – Unlike non-auction properties, you can see all the bids on an auction house. This bid/offer transparency can help you to secure the property for a more affordable price.
Fair – Sometimes, when buying a non-auction property, you can feel pressure to get your offer in as quickly as possible to get it off the market and secure the house. Auctions, on the other hand, start at a set date and time and you needn’t be beaten out by an early offer.
Reliable – With no chains to deal with and the contracts being signed soon after the auction is over, you won’t have to deal with unwanted delays or the seller backing out before you move in.
Greater choice – If you’re looking for a renovation project with plenty of potential, auctions are the best places to find hidden house gems.
What are the pitfalls of buying a house at auction?
Requires 10 per cent deposit – Unlike some schemes where first time buyers only require a five per cent deposit, you’ll be required to pay a 10 per cent one immediately after your bid has been successful. Not to mention, the remainder of the auction price will need to follow shortly after.
Getting carried away – As the bids rise you may feel tempted to continue increasing your own offer, but you must be cautious of overspending! Setting a strict limit before the auction begins can help you to put down the paddle before you break the bank.
Price fluctuations – When searching for auction properties you must bear in mind that the price is likely to rise considerably. Starting bids are often set low to generate interest, but these bids can increase substantially – especially if the competition is strong!
Requires research – Between covenants and structural issues, it’s often not wise to bid on a property without conducting a thorough survey or asking a solicitor to look at the property’s legal pack first. This is because auctions are a common place to find properties with significant legal concerns.
No turning back – Once the auction has come to an end and you’ve won with the highest bid, the property is yours, so you must be confident that both the property and the price is right.
How much does it cost to buy a house at auction?
According to HomeOwners Alliance, there are four key costs to consider. This includes the auction house’s administration fee (often £200-£300), solicitor/conveyancer fees, stamp duty costs, and the cost of insuring the property once you’ve won the property and signed the contract. Naturally, these costs vary, and you will also have to pay the price of the property, so ensuring you have the necessary funds available is essential.
How do house auctions work?
Before buying house at auction
Before buying a house at auction, it’s vital that you do your research. From registering at the auction house and being aware of the costs, to double checking the legal pack, viewing the properties you’re interested in, and arranging a mortgage in principle, there’s a lot to do. Property surveys, independent valuations, and buildings insurance will also need to complete before the auction date.
On the day of the auction
On the big day it’s important to ensure you have all the required paperwork (photo ID and proof of residency), a good seat in clear view of the auctioneer, and a copy of the addendum sheet to make sure you’re well aware of any last-minute changes to the schedule. To bid on a property, clearly raise your hand or paddle.
After the auction
If your bid is successful, you’ll need to pay a 10 per cent deposit on the day with the remaining 90 per cent required within 28 days. You’ll then have to pay all the associated costs explained above such as the Stamp Duty Land Tax, auction house administration fee, and buildings insurance.
If your bid was unsuccessful and the property doesn’t sell, you can still make a private offer afterwards at the auctioneer’s discretion.
How to find properties for sale by auction
When a property goes onto the market for sale by auction, it’s listed either by an auction house or an estate agency. We therefore recommend searching for local estate agencies and property auction houses that you can visit or contact regularly to uncover the best deals and latest properties to hit the auction market.
Here at Mistoria Estate Agents, you can search a wide range of attractive investment properties packed with potential from across the UK available to be purchased via auction. From starting bids to the time left until the property goes to auction, you can place bids and find all the information you need and more by heading online to our transparent platform.
How can Mistoria Estate Agents help?
As one of the leading estate agencies in the North West, our experienced and highly knowledgeable team of property professionals can support you with all your property auction enquiries and requirements.
Specialising in buying and selling property in the North West of England, we have offices in Liverpool, Salford, Bolton, Worsley, and Cheadle.
To contact our expert team of approachable estate agents in our Manchester-based head office, please feel free to give us a call on 0800 500 3015. You can also email us your enquiry to the address email@example.com or head over to our handy online contact page to discover your nearest Mistoria Estate Agents branch.
Priding ourselves on our ability to provide exceptional service in the form of quick, expert auction support, we hope to hear from you soon.