In This Guide
Apply for a mortgage
Buying at auction
1. Introduction
2. Pre-auction preparation
3. On auction day
4. Bidding tips
Buying in Scotland
Conveyancing
Find and view
Negotiate
Plan your purchase
Success and failure
Surveys and valuations
To buy or not to buy
Buying at auction
Introduction
When you conjure up a mental picture of an auction, you may well envisage Delboy Trotter in his sheepskin coat smoking a cigar in a room full of similarly wide geezers. Not wishing to scribble all over your imagination, but they are not actually like that. An auction - although stressful - is actually quite a civilised place and many are now held in well-to-do hotels. In recent years the auction houses have taken great strides towards modernising the way they do business and one of the benefits of this is a much better level of customer service. This means that you'll now be able to get useful guides, financial advice and even seminars that guide you through the bidding process and beyond.
One of the main attractions that drive people to buy at an auction is the potential for a bargain. Many of the properties being sold at an auction are being sold for a reason other than the vendor wanting to move. It may be that a home is being sold due to debts, bankruptcy or repossession, by a housing association that no longer needs it, maybe it was originally bought with ill-gotten gains and the police have finally caught up with the perpetrator and claimed back the property, or perhaps it has been empty for a period of time, since the former inhabitant passed away leaving no descendants. There are many reasons why a property might be sold at auction and a good proportion of them result in the properties being offered for less than their potential value.
Therein lies the important word - 'potential'. Most auction catalogues contain properties that are best suited to buyers who wish to renovate or do some serious improvement works. You will be very lucky to find a home that you can move straight in to. They do pop up now and again, but they are few and far between.
A further benefit of auction properties is that they are almost universally offered with vacant possession. This means that there are no chains to break and the sale can go through quickly. It is perhaps for this reason that the Institute of Surveyors and Valuers advises you not to bid for a property if you are relying on the proceeds of the sale and have not yet exchanged contracts.
Though you may get the feeling that an auction is a place of spontaneity and mad impulsive purchases, which should definitely not be the case when it is property that is falling under the hammer. Preparation is a vital component in a successful purchase at auction. You need to research the properties, sort out your finances and be ready to quickly progress with the sale.
TheMoveChannel is ready as ever with reviews of websites provided by businesses that are involved in the auction process. Click here to visit the appropriate section of SiteFinder.
It is worth getting on the mailing list of any auctioneers who regularly hold sales in your area, as this helps to maximise the length of time between you becoming aware of a property and the date of the actual auction.
The auction houses will send you a catalogue covering the properties that are coming up in forthcoming auctions. The catalogues do not go into great detail - they will show some pictures of the property, maybe give a floor plan, provide some details of the type of tenure and an indication of the guide price. The guide price is nothing more than an estimate of the eventual sale price. The reserve (or lowest selling price) will often be set much lower, though the eventual sale price is just as likely to be higher. It is worth pointing out that it can sometimes be worth making a private offer in advance of the auction. It is not uncommon for a vendor to accept a bid in this way if they think it is good enough for them not to bother with the costs of putting it through the auction - around 15% of properties put up for auction are said to be sold before auction day actually arrives.
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