How to buy property at auction

18-12-07, UpMyStreet ©

Buying property at auction has distinct advantages over buying a home the traditional way - particularly if you're looking for an exclusive or unique building, a bargain property investment or a quick completion. With one in 20 property sales now concluded through an auction house rather than an estate agent, it's a growing market.

But buying a home under the hammer has its own complications and risks. This guide to buying at auction will take you through the basics.

1. Do your research

Start off by doing some research on the type of property and area you're looking for - exactly as you would do during a traditional property search. Research local property prices in the area to get an idea of the local market and learn about the neighbourhood - crime rates, local council performance and schools in the area.

Read our guide to choosing a local area for more tips and advice.

2. Find your nearest auction house

Locate your nearest auction house and subscribe to their auction catalogues, which list all upcoming properties for sale a month in advance. Often auction announcements are published in local newspapers. Your local council - who often auction off repossessed, dilapadated or empty homes - will also be able to recommend local auction houses.

3. Learn about the process

Visiting an auction house will help to familiarise yourself with the dos and don'ts of the bidding process. Speak to an auctioneer, who will be able to answer questions on how it works. You can place bids in person, on the phone or through an appointed solicitor.

4. Visit properties

Shortlist properties that you are interested in and arrange viewings in the same way you would with an estate agent. Now Home Information Packs are required for all properties, ask the seller to provide you with a copy.

5. Upfront costs

Buying at auction requires a number of upfront costs that will not be reimbursed if you do not win the property bid, including:

• A survey, conducted by a qualified surveyor, to assess the structure of the building
• Legal fees, to cover the cost of a solicitor overseeing the sale and examining paperwork
• Mortgage arrangement fee, payable on applying for a mortgage
  

6. Calculate your budget

Calculate a detailed budget plan in advance of auction day. Assume the guide or reserve price of the property is at the lower end of the scale, and that you're unlikely to make a successful bid if your budget only extends to this amount. Often auctions will set a low guide price in order to attract bidders to the auction, and properties will go for significantly more.

7. The auction

On auction day, ask for a copy of the addendum for any changes that may have been made to the original details of the property and take your seat before the bidding starts. Bidding can be a daunting experience - here are a few etiquette tips:

• Clearly raise your hand or a paddle to make a bid
• Scratching your nose is highly unlikely to be interpreted as a bid by the auctioneer
• Catch the auctioneer's eye to ensure they notice your bid
• Don't get carried away and bid more than you can afford
• A successful bid cannot be retracted if you later change your mind
  

8. Being outbid

If you lose out on the property to another bidder, you'll also lose the fees you've already spent before the auction. In the heat of the moment it's tempting to bid on another property straightaway - but doing this without the proper preliminary work is not advisable.

9. A successful bid

Once the hammer drops and the auction for the property has ended, the sale is legally binding.

A property purchase through an auction usually needs to be completed within 28 days, and you will need to faciliate this by preparing the money for transfer and signing the appropriate contracts within this timeframe. You will need to pay the deposit - usually 10% of the total sale price - before you leave the auction.

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