If you want to buy a property at auction you should follow the following steps.
- Get on local auctioneers' mailing lists. Auctioneers can be found through either online searches, or local business directories. They will then send out catalogues of properties, including a guide price and floor plan. Auctioneers also advertise in local newspapers and property websites.
- Viewing a property. Call the auctioneers, arrange a viewing and take detailed notes about the scale of renovation that needs to be done before you decide to bid. Contact local builders to get estimates of the work involved.
- Finding the money. Due to the speed of the buying process at an auction, you need to ensure you have the money in place before the auction takes place. A successful bid is legally binding the moment the hammer drops. Around 10% of the price is required up front at the auction, with the rest within 28 days. You should not bid at an auction if you have not yet received a mortgage offer or the sale of a home has not been completed. When approaching mortgage lenders it is vital you let them know you intend to buy at an auction.
- Get a survey. Your mortgage lender will require a valuation or survey before the auction to verify its guide price. It is advisable to commission a full structural survey for properties in need of a lot of renovation work. Occasionally auctioneers will produce their own pack of information, including a survey, but it is still advisable to commission your own.
- Consult with a solicitor before the auction. When buying at an auction much of the conveyancing work takes place before the auction. This includes carrying out checks, such as any legal problems with ownership and planning applications in the area.
- Work out how much to bid. It is important to take into account a number of other costs when deciding how much to bid, including building work, solicitors fees, stamp duty and moving costs. Sometimes a bid can be accepted before an auction takes place. This happens when a property is listed as up for auction, "unless previously sold". Selling at an auction incurs fees for the seller and they may prefer to sell beforehand.
- Be prepared. Many experts will advise attending a few auctions as a spectator before considering buying at an auction. This will help to familiarise you with the bidding process. When you feel confident to attend an auction to make a bid you will need to make sure you bring: the house details, two documents proving your identity and a banker's draft or building society cheque for 10% of your top price. The auction house will refund any difference if the property sells for less.
- The bidding process. When arriving you need to register. Some auctioneers will give a number to hold when making a bid, but in most cases holding up a hand or catalogue is acceptable. Bidding can also take place by telephone, by your solicitor in person and online. Check with the auction house for details about alternative ways to bid. Bidding will start below the guide price and move usually in multiples of £5,000, or £1,000 if bidding slows down. A reserve price will be fixed and if the property fails to meet this it will not be sold. It may be possible to contact the seller directly if this happens to see if you can negotiate a sale afterwards.
- Making a successful bid. You will be successful if you are the highest bidder when the auctioneer's hammer falls. Then you will be required to hand over your deposit, proof of identity and solicitor's details and will be given a legally binding contract, with the remaining sum due within 28 days.