Buying at Property Auctions: The Complete Buyer’s Guide
Buying a property at auction can look daunting from the outside.
Legal Packs, guide prices, deposits, bidding, finance and fixed completion dates can make the process seem complicated. But once you understand the stages involved, it becomes much easier to navigate.
Whether you're buying an investment, a renovation project or somewhere to call home, this guide takes you through the property auction process from first search to collecting the keys.
Property Auctions: Start With What You're Looking For
Before scrolling through properties, establish what you actually want.
Are you looking for a home to live in, a buy-to-let investment, a renovation project or perhaps something to refurbish and resell?
Having a clear objective helps you judge each property on its merits rather than simply being tempted by an attractive guide price.
Property Auctions: Understand the Guide and Reserve Price
Two figures you'll hear regularly when looking at property auctions are the guide price and reserve price. They are related, but they're not the same thing.
A guide price is a marketing figure used to give potential buyers an indication of the property's price expectations and its relationship to the reserve. It may be shown as a single figure or as a price range.
It is not a prediction of the final selling price. Ultimately, the price achieved will be determined by the level of bidding during the auction.
The reserve price is different. This is the minimum price the seller has authorised the auctioneer to accept. The reserve remains confidential and the property cannot normally be sold at auction below it.
Research the Property Before You Bid
Never judge an auction property from photographs and the guide price alone.
Research comparable properties that have recently sold nearby. Look at the street, surrounding area, transport, amenities and local market.
Then consider the property itself. What's its condition? What work might be required? What could it realistically be worth once that work is completed?
The objective isn't simply to find a cheap property. It's to understand what you're buying and what it's worth to you.
Property Auctions: Always View the Property
Whenever possible, inspect the property before bidding. Look beyond dated wallpaper and old kitchens. Cosmetic problems can often be relatively straightforward to remedy.
Pay closer attention to potential structural defects, damp, roofing, windows, heating, electrics and signs of previous alterations.
If you have concerns about the condition, consider obtaining appropriate professional advice or a survey before bidding.
Arrange Your Finance Before You Bid
Never win an auction and then start working out how you're going to pay for it.
Whether you're using cash, a mortgage, bridging finance or another funding route, have your finances arranged before you bid and make sure they can work within the contractual completion timescale.
If you're using a mortgage, speak to your adviser or lender beforehand. It's important to establish whether both you and the property are likely to meet lending requirements.
Property Auctions: Have Your Solicitor Ready
Your solicitor shouldn't be an afterthought.
Before bidding, you should already have a solicitor in place who has confirmed they're able to act for you and work within the auction completion timescale.
Ideally, they should also review the Legal Pack before you commit yourself to the purchase.
That means if you're successful, they can begin progressing matters immediately.
Read the Legal Pack – And Be 100% Satisfied Before You Bid
This is one of the most important parts of buying through property auctions.
The Legal Pack contains crucial information about what you're actually buying and the terms under which you're buying it. It may include title documents, searches, leases, tenancy information, Special Conditions and other documentation relevant to the sale.
Never place a bid unless you are completely satisfied with the Legal Pack and understand the commitment you're about to make.
Pay particular attention to the Special Conditions. These can contain provisions, costs or requirements specific to that particular property.
If there's anything you don't understand, aren't comfortable with or simply aren't sure about, speak to your solicitor before bidding.
Once you've successfully bid, it's too late to decide you don't like something you've subsequently discovered in the Legal Pack.
Property Auctions: Calculate the Real Cost
The winning bid isn't necessarily the total cost of buying the property.
Your budget may also need to account for:
Stamp Duty Land Tax, where applicable
Auction or buyer fees
Legal costs
Finance costs
Surveys
Insurance
Refurbishment
Other costs specified within the Legal Pack or Special Conditions
If you're buying as an investment, include an appropriate contingency too.
A £150,000 property isn't a bargain if you've underestimated what it will actually cost you.
Can You Make an Offer Before a Property Auction?
Yes. In some circumstances, sellers may consider a pre-auction offer.
If you've found a property you're serious about, you can approach the auctioneer and submit an offer before the scheduled auction.
The seller doesn't have to accept it and may prefer to let competitive bidding determine the result.
If a pre-auction offer is accepted, expect the transaction to proceed under auction-style terms. You should therefore still have completed your due diligence, reviewed the Legal Pack and have your solicitor and finances ready.
Property Auctions: Set Your Budget – And Stick to It
Decide your absolute maximum before bidding starts.
Auctions are competitive, and it's very easy to get caught up in the moment. Another £500 becomes another £1,000, and suddenly you've paid considerably more than you intended.
Your maximum should be based on the property's value to you, taking into account refurbishment, fees, finance costs and other expenditure.
Once you reach that figure, stop bidding.
Don't chase another bidder simply because you want to win. Sometimes the smartest bid you'll make is the one you decide not to place.
Register to Bid
Before participating, you'll need to complete our registration process.
This involves providing identification, completing relevant verification checks, preauthorising deposit funds and accepting the auction terms and conditions.
Don't leave registration until the final few minutes. Give yourself enough time to complete everything properly and resolve any queries before bidding begins.
Property Auctions: Understand What Happens If You Win
This is crucial.
If you are the successful bidder and the reserve has been met, you are entering into a legally binding purchase in accordance with the auction conditions.
This isn't like making an offer through an estate agent and changing your mind afterwards.
You can't simply decide the following morning that you've paid too much, don't like something you've discovered or no longer want the property.
You'll normally be required to pay the deposit and applicable fees promptly and complete the purchase within the contractual timescale.
Failing to complete can have serious financial and legal consequences. Depending on the contract, these could include losing your deposit and becoming liable for additional costs or losses.
That's why the important work happens before you bid.
By this point, you should have viewed and researched the property, be completely satisfied with the Legal Pack, have your solicitor ready, your finance arranged and your maximum bid firmly established. Only then are you ready to bid.
It's Time to Bid
This is the exciting bit. With an online auction, you can follow the bidding as it happens and place bids up to your predetermined limit.
Don't be intimidated by other bidders and don't try to second-guess their strategy.
They have their number. You have yours. Bid with your head, not your heart.
If someone is prepared to pay more than your maximum, let them. There will always be another property.
You've Won – What Happens Next?
Congratulations. If your successful bid has met the reserve, the property is yours subject to the auction contract - and now things move quickly.
You'll normally need to pay the required deposit and any applicable fees promptly. Your solicitor can immediately begin progressing the transaction towards completion, while you finalise funding and deal with matters such as insurance where required.
The completion deadline will be determined by the contract and Special Conditions, so know the exact timescale before you bid rather than assuming every auction operates identically.
Property Auctions: Completion and the Keys
Your solicitor will arrange for the remaining purchase monies to be transferred in accordance with the contract.
Once completion has taken place, ownership transfers and arrangements can be made for you to receive the keys.
You've done it. What started as a property you spotted online is now yours.
The AffordaBid Buyer's Golden Rule
If there's one thing to remember from this guide, it's this:
Do your homework before you bid - not after you've won.
Successful auction buyers aren't necessarily property experts. They're prepared.
They understand the property. They've viewed it. They've researched its value. They've read the Legal Pack. Their solicitor is ready. Their finances are arranged. They understand the costs. And they know exactly how much they're prepared to bid.
Once all of that is done, the auction itself should almost be the easy part.
At AffordaBid, we believe property auctions should provide buyers with a clear, transparent and competitive environment in which to purchase property, backed by straightforward information throughout the process.
Ready to Start Looking?
You don't need to be a seasoned property investor to buy at auction. You need to be informed, prepared and disciplined.
Whether you're looking for your next home, investment or renovation opportunity, AffordaBid is here to help you understand the process and answer your questions before you bid.
See something you like? Register to bid, book a viewing or contact the AffordaBid team and we'll help you take the next step.
Important Disclaimer
This article is provided for general information only and does not constitute legal, financial, tax, investment, surveying or property advice. Auction properties and contractual terms vary, and buyers should carry out their own due diligence and obtain appropriate independent professional advice before bidding.
Always read the Legal Pack, Special Conditions and auction terms carefully and ensure you understand the legal and financial commitment before placing a bid. AffordaBid accepts no liability for losses arising from reliance on this article.
