Auction day

Auction day tends to be quite frenetic. There are often hundreds of properties for sale, and each property may only take around two to three minutes to sell, so it’s important to keep track of the lots. If you are successful, you become legally obliged to buy the property the minute the hammer comes down. At this point you must pay a ten per cent deposit.

As soon as your bid is accepted, the sale becomes legally binding – it’s too late to change your mind so you need to be sure you’ve made the right preparations.

Possible downsides

One downside of buying at auction is that you’ll need to have organised your valuation/survey, solicitor and mortgage beforehand. And even though you’ve paid a few hundred pounds for these, there’s no guarantee you’ll be the successful bidder.

The situation may be a little better when home information packs become the norm, but don’t hold your breath.

Some auction houses already offer legal packs which can speed up the process. Often costing only a few pounds, the pack includes such details as the property’s Land Registry entries and local searches.

But long before you reach this stage, it pays to be prepared. One of the first steps is to find out how much you can afford to spend. Your mortgage advisor could help here or perhaps the best place to go is your bank, because it has a clear idea of your financial position.

You should not be relying upon the sale of your property for the money unless contracts have been exchanged. It may be possible to arrange a bridging loan, but these are often very expensive, particularly if something goes wrong and you need the loan for some time.

If you are the successful bidder, you will be asked to pay ten percent on the day of the auction, so make sure you have your money in an instant access account.

If you think the property is right for you then you’ll need to work fast. See your solicitor straight away and make him aware that the property is for sale at auction. The contract for the property will be in the auction catalogue, and any special considerations relating to the particular property you want will be available from the auction house. Your solicitor needs to check that everything is in order so on the day of the sale, if your bid is successful, you can exchange contracts.

Preparation

Obtain a survey before the auction too, and prepare to arrange the mortgage. In every case you will need to advise people of the urgency because of the auction deadline. Ask those involved to get things to you a week before the sale. If you make the surveyors aware of the fact that you are going to have to raise a mortgage to buy the property they will be able to carry out a valuation for the lender at the same time.

After the auction there are then normally 28 days to completion. You’ll need to make a mortgage application quickly, so it is important when you are speaking to an adviser you make them aware of this deadline.

Your adviser should also be able to recommend which lenders are better for turning round applications quickly and which ones have a reputation for being slow.

If you’re organised and choose a speedy lender, you could move into your new home just seven weeks after you first set your eyes on it.

You can approach estate agents, of course, but in most cases they will be more interested in seeing if they can sell you a property (either on their books or potentially) so it may seem like a waste of time. However, you may come upon the right one at the right time.

Other ways:

Quick tips for buying property at auction

• Ask the auctioneer if he has any information about the property that he can let you have as soon as you are interested. This may save you valuable time (and money) searching facts out.
• Always set a personal price limit on the property long before the auction. On the day, don’t get carried away and exceed it.
• Discuss with your surveyor the upper price limit that you should pay for the property.
• Remember to take into account advice from your lender and others about fees, stamp duty, repairs needed, etc., when calculating your budget and working out your personal price limit.
• Don’t buy a property before you’ve sold yours i.e. before the completion has happened - assuming you’re relying on that sale to buy at auction.
• Don’t buy a property without having had a survey done. Not only will you limit the potential nightmare of building problems but you’ll also have a basis on which to bid, as well as knowing your mortgage limit and how much of a deposit you require.
• Time is precious. On average you’ve only got three or four weeks to play with. So you need to know what’s coming on at auction, as soon as possible. And to get a head-start over your competition you need to be one of the first to get the catalogue – i.e. as it’s printed and released - just like the trade professionals.

Buying a property at auction may present a challenge and certainly you should be prepared to do plenty of hard work organising and chivvying before the auction. Don’t skimp on studying the property, however. Make sure you look over it personally and in detail. Structurally your surveyor may inform you of things and potential costs that need fixing, but you own eyes will tell you far more about the potential for the property and the garden, the surroundings and amenities, whether you intend to live there or not. And you’ll have to do this all quickly, which may if you let it, cloud your judgement.

But the best thing about buying at auction is precisely the speed and certainty. Once the auctioneer has slammed down his gavel to indicate the sale has been made, the successful buyer will own the keys to the property in just 28 days time.

Read Part 1 of this guide:

Buying property at auction - part 1

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