Buying a Property at Auction - FAQs

It has become more popular in recent years for homeowners to buy their first or next property at auction. Whilst this has long been a preferred strategy by some residential developers and landlords building a property portfolio, TV programmes such as the BBC’s ‘Homes Under the Hammer’ have generated a lot more interest in this way of buying a home for regular homeowners too, in the pursuit of getting a property at a discount price.

Some of the reasons that people look to buy their next home at auction include:

  • Auction purchases are fast; the entire process has to be completed in just a few weeks
  • There is no chance of being gazumped if you successfully bid on a property at auction
  • You have a clearer idea on what you are paying, rather than the growing practice of using sealed bids to drive up the sale price of a property on the open market where you don’t know what other interested parties are willing to pay

However, buying at auction comes with some risks and there are many terms and considerations that should be met before taking this route. We have compiled some of the questions that we are frequently asked about the process of buying a residential property at auction, to help you decide if it’s something you want to pursue. For specific information about a potential property purchase, at auction please contact our conveyancing team for tailored advice.

What are the risks of buying a house at auction?

If you are considering buying a property at auction, there are several risks or pitfalls that it can be easy to be caught out by if you’re not properly prepared for the differences to conventional house buying.

  • As the entire process is designed to be quick, finances need to be in place before you bid
  • Failing to complete by the contractual completion date (usually 28 days from the date of the auction) can mean you lose your 10% deposit, along with the property
  • The responsibility for checking that the property matches its auction catalogue description is with the buyer – you need to view the property and get a survey done before the auction takes place, as well as get a solicitor to check over the legal pack on your behalf
  • You become liable for the property and any damage as soon as your successful bid is accepted, therefore property insurance must be put in place immediately the auction has taken place
  • Auctions can get competitive and many bidders find they pay more than they should for a property in the heat of the moment. Having a firm limit before the auction starts and sticking to it is vital to ensure you’re not spending money that you’ll never get back if you sell the property in the future

What does an auction property legal pack include?

The legal pack for an auction property should be available (often to download) from the auction house before the day of the auction. This will contain the documentation gathered by the seller’s solicitor and will include:

  • A copy of the property’s title
  • Results of land registry and local searches
  • Any special conditions attached to the sale e.g. clauses that prevent development or certain types of use
  • Information about the property, fixtures and fittings, and any leases or tenancy agreements in place
  • Planning permission documents, if applicable

It’s always recommended to ask your solicitor to look over the legal pack in advance of the auction so that you know of any legal issues that could devalue the property or scupper the plans that you might have for it. Once the hammer falls on your winning bid, you are legally committed to buy the property and can’t back out if you later find something in the legal pack that should have been spotted before the auction.

What do I need to have ready before bidding for a property at auction?

Before arriving at the auction, it’s advisable to do your homework on the property or properties that you intend to bid on. This includes a viewing, a survey and having a solicitor look over the legal pack. This ensures you can make an informed decision on whether or not to bid and the maximum you should spend if you do.

You will also need your finances in place for purchasing the property. On the day, you will be required to pay a 10% deposit before leaving the auction, and must complete on the property within 28 days. Most traditional mortgage routes will take longer than this time frame, so special measures will need to have been set up before you bid to ensure you’ll be able to fulfill this part of the transaction within the deadline. Obviously, this measure isn’t required if you are a cash buyer with the money for the purchase already available in full.

Do I need to pay for a survey before I bid on a house at auction?

Paying for a survey on a property that you are not sure that you’ll even win can seem like a bit of a risk, but the risks associated with not getting a survey done and buying a property with serious structural issues mean that it’s strongly advised to pay for one to be done, although it isn’t compulsory.

Whilst not true in all cases, many properties are sold at auction because they have proven difficult to sell on the open market, perhaps through defects, an issue with the title or conditions attached to the sale. A structural survey should highlight any major issues, so that you know what you’re dealing with before you bid.

When do I need to instruct a solicitor regarding an auction property?

When buying an auction property, a solicitor should be instructed before the auction happens, so that they can check the legal pack and any sale conditions before you bid. Unlike conventional property purchases, where there are usually a few weeks before contracts are exchanged, to allow time for the conveyancing process, with an auction, the contract is exchanged when the gavel falls. This means that any legal checks will need to have been done before the sale of the property, as you’re legally obliged to complete the purchase once your winning bid is accepted.

Many auctions include homes that have been repossessed or have come from the estate of a deceased owner, so the vendors may have little or no knowledge of the property or its history and any issues it has. Having a solicitor do as much of the conveyancing work as possible before the auction will help to reduce the chances of hidden problems being found when you’ve already committed to buy.

Can I change my mind once I have won an auction for a property?

As soon as the gavel falls on the property with your winning bid, under UK law you are committed to completing the purchase. If you change your mind and do not wish to proceed, or if you fail to complete before the deadline for any reason, you will lose the house and the 10% deposit that you paid on the day of the auction.

There are some rare circumstances in which misleading information may have been given about the property, which could potentially give you grounds to refute that it is as described, but this is a complex area of the law, with no guarantees of a successful outcome. The onus is very much on the buyer to make all necessary checks and view the property themselves before bidding in the first place.

How long does it take to get the keys to an auction property?

One of the benefits of buying a property at auction is that the entire process is very quick. Usually, the completion date is set no more than 28 days after the auction, and is often even faster if all the recommended pre-sale work was done by the buyer and their solicitor and the necessary finances are already in place. You will get the keys to the property upon completion, so for most auction-bought houses, this will be no longer than a month after the sale day.

For information or advice about an auction property purchase, please contact our expert team for assistance.

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