Buying and Selling at Auctions – Some Common Misconceptions

Buying or selling property at auction is an increasingly popular method in the UK, offering a faster and often more transparent alternative to traditional real estate transactions. However, myths and misunderstandings persist, which can deter or misguide potential buyers and sellers.

We’ve put together everything you need to know about navigating property auctions successfully.

What is a property auction?

A property auction is a public sale where properties are sold to the highest bidder. Auctions can be held in person, online, or through hybrid methods. Buyers and sellers can both benefit from a transparent process, with clear timelines for contract exchange and completion.

Buyers FAQs

1. What is an auction legal pack?

The auction legal pack contains essential documents such as the title deeds, searches, terms of sale, tenancy agreements (if applicable), and any warranties. Buyers should have their solicitor review this pack thoroughly before the auction to identify potential risks or obligations. This is the key message for people buying at auction as contracts exchange at auction which means you are legally obligated to purchase the Property and we would strongly advise you to instruct a solicitor beforehand to review the auction legal pack and report to you on the terms prior to the auction.

2. Can I view a property before the auction?

Yes. Most auction houses arrange viewing dates, which you should attend to inspect the property and gauge its condition.

3. Do I need a deposit on the day?

Yes, buyers must pay a 10% deposit immediately after a successful bid. Ensure you have cleared funds for this purpose, as failure to provide the deposit will nullify the sale and could incur penalties.

4. Can I finance my purchase with a mortgage?

Yes, but you need an agreement in principle before the auction. Mortgage financing for auction properties can be challenging due to the short timeframes, so it is advised to consult a lender familiar with auction transactions before bidding.

5. Can I change my mind after a winning bid?

No. Once the auctioneer’s hammer falls, the sale is legally binding, and withdrawing will forfeit your deposit.

6. When can I move in or complete the purchase?

Completion typically occurs 20 working days after the auction. At this stage, you pay the remaining balance, and the property’s ownership transfers to you.

7. Are auctions only for investors?

No. Auctions are suitable for first-time buyers, families, and businesses, depending on their needs and budget.

8. What additional fees should I be aware of?

Besides the purchase price, buyers often pay auctioneer fees, administrative costs, and possibly survey fees. These are outlined in the auction terms.

Sellers FAQs

1. Why sell at auction?

Selling at auction guarantees a swift and transparent sale, often within 4–6 weeks. It’s ideal for unique properties, homes needing renovation, or situations requiring fast transactions.

2. What costs are involved in selling at auction?

Sellers typically pay an entry fee and a percentage of the final sale price as commission. Discuss this with the auction house to understand the costs upfront.

3. What price can I expect?

While properties can achieve higher-than-expected prices in competitive bidding, sellers should set a realistic reserve price should it not go the way they hope.

4. How do I prepare my property for auction?

Provide accurate documentation, complete necessary repairs if possible, and stage the property for viewings to attract serious bidders.

Common misconceptions

“Auctions are only for distressed properties.”

Not true. Properties at auction range from high-value homes to commercial premises, vacant land, and investment opportunities.

“Buying at auction is risky.”

While there is an element of risk, thorough due diligence (including legal pack reviews and surveys) minimises any potential issues.

“Auctions always result in a bargain.”

While competitive bidding may lead to bargains, some properties sell for more than their market value if demand is high.

“Sellers lose control over the final price.”

Sellers can set a reserve price, ensuring the property won’t sell below an acceptable amount.

Buying or selling property at auction in the UK is a streamlined, transparent process, offering opportunities for both investors and homeowners. By understanding the process, dispelling misconceptions, and seeking professional advice, you can confidently participate in auctions.

For further assistance, contact Esme Barker or Jennie Whieldon to help guide you through your auction journey.