Property auctions can be a highly complex topic, especially if you are a newbie to the game. If you haven’t checked out our property auction guides, please check our property auction hub for more information.
If you are looking for a specific question, try out our interactive menu below for our FAQ categories:
- Buyer FAQs
- Buyer Marketing
- Buyer Process
- Buyer Post-Auction
- Seller FAQs
- Seller Marketing
- Seller Process
- Seller Post-Auction
Subscribe To Our Newsletter
Property Auctions Buyer FAQs
Are Property Auctions For Cash Buyers Only?
No, property auctions aren’t specifically for cash buyers; you can use a bridging loan or specialist auction finance instead. Being a cash buyer at a property auction ensures the speed of sale is kept as efficient as possible.
Can A Property Auction Be Cancelled?
Yes, if the buyer pulls out before the gavel falls, as there is nothing legally binding until the exchange of contracts. However, as soon as the gravel falls, if the buyer pulls out, they will face heavy fines for losing their deposit, time and auction house penalties.
What’s The Difference Between A Conditional And Unconditional Auction?
A conditional auction is also known as a traditional auction which lasts for 28 days; the exchange of contracts takes place as soon as the auction is won — and the buyer must pay a non-refundable deposit. An unconditional auction is known as a modern auction and lasts for 56 days; there is a 28-day period between the exchange of contracts and completion — making this a much more attractive auction model for people buying with a mortgage.
If you want to know more, try our ”Guide To Selling At Auction.”
What Are The Legal Conditions When Using An Online Auction?
If you are buying a property via a conditional auction route, when you win a bid, you are legally committed to a sale, and you will need to exchange on the day — there are then 28 days to complete.
If you are buying a property via an unconditional auction route and win the bid, then you will need to pay a reservation fee and exchange within 28 days and then there are a further 28 days to complete. Only when you exchange contracts does the process become legally binding.
Can I Mortgage An Auction Property?
Yes, you can get a mortgage agreement with a lender to buy a property at auction, but beware that not all properties at auction are eligible for mortgage finance. You should acquire the mortgage agreement before starting the auction process, and the lender will need to conduct a mortgage valuation of the property once you win the bid.
What Are The Timescales For A Property Auction?
For a traditional property auction, marketing (house viewings, open days, listing on property portals) can last up to a month. The actual property auction can last anywhere from one minute to an hour, depending on the lot amount. Once the bid is won and the exchange of contracts happens, there is a 28-day period until completion.
Marketing can last up to a month for a modern property auction. The property auction typically runs for about 28 days and is available 24-7 and online — similar to buying an item on eBay. After the reservation fee is paid, there is a 28-day period to exchange contracts and a further 28-day period to complete.
What Will Be In The Legal Pack?
A legal pack will conclude any legal information needed to buy and sell a home, including:
- Title Deeds.
- Special Conditions of Sale.
- Land Registry and Local Search.
- Leases & Tenancy Agreements (if applicable).
- Property Information Form.
- EIC (Electric Inspection Certificate).
- Management Information.
- Planning Permission Documentation.
What Are The Special Conditions Of Sale?
Special conditions are additional terms attached to the buying of the property outside of the standard terms used in the contract — this could include terms like; when and how the exchange of contracts takes place, the amount of deposit to be paid, legal obligations of the seller etc.
What Are The Fees When Buying At Auction?
Fees and costs will vary depending on which auction house you decide to use; however, as a standard rule of thumb; the auction house should offer you a fixed fee of around £1000+VAT or 1-2%+VAT of the final selling price unless there is a buyer’s premium as well. You may also face additional fees that you can find in the Special Conditions of Sale.
What Costs Will I Face When Buying A Property At Auction?
When you buy a property through a traditional auction, you will pay a property deposit of around 10-15% at the exchange of contracts. At a modern auction, you will pay a reservation fee of 5% at the bid win and then a deposit of 5% at the exchange of contracts.
You will also need to hire a solicitor who will cost around £300+VAT for a full-pre auction report and the same for a post-auction survey — occasionally, the auction house may cover the cost of your solicitor.
Is Any Bid I Make Binding?
No, bidding is not a legally binding contract. As a buyer, you can make as many bids as possible if the gravel hasn’t fallen. As soon as the gravel falls, your winning bid becomes legally binding in a traditional auction because you exchange contracts.
If you are in a modern auction, it isn’t legally binding until the exchange of contracts after the first 28 day period.
Property Auctions Buyer FAQs – Marketing
Can You View An Auction Property?
Yes, you can view a property before an auction. Usually, the auction house will allow you to visit as part of a house viewing or open day. They will enable you to see after they have released the property catalogues.
How Can I View An Auction Property?
Most auction houses will arrange a schedule for an open house and house viewings. You will be able to find the available house dates from the property listing; alternatively, if you wish to visit privately, you should ring the auction house for more information.
What Kind Of Due Diligence Should I Do Before Buying A Property At Auction?
Before you bid on any property, you should conduct thorough due diligence; this might include researching the property on Rightmove or Zoopla, consulting a solicitor, checking the HM Land Registry and conducting a survey to value the property and study its internal structure.
For more information, check out ”How Do Property Auctions Work?”
Property Auctions Buyer FAQs – Process
How Do Property Auctions Work?
Property auctions allow you to sell or buy a property in a competitive market with bids and engagement. Property investors and landlords prefer the process, but there has been a rise in private residential property being sold.
Can You Buy An Auction Property Before The Auction?
Yes, you can attempt to make a bid on a property before the auction day. This applies to both traditional and modern auction systems. However, you must ensure that you are a genuine buyer and are willing to offer more than the guide price, as the seller will expect to make more at auction.
How To Buy A Property From Auction?
During a traditional auction, you will either be invited in person to an auction hall, visit the auction online or place proxy bids over the phone. The auctioneer will typically have several lots, and a traditional auction lot will last anywhere from 1 minute to 7 minutes, depending on the demand.
They will begin the auction with a low price and then continue to increase as bids continue, steering it towards the reserve price from the seller. You will win the auction and exchange contracts when your offer is the highest or closest to the seller’s reserve price.
During a modern auction, the process varies slightly. Typically modern auctions are done online and last around 28 days, where you can access it from anywhere in the world, at any time.
Bids are done online or over the phone via proxy bids and are usually slow to come in at the start but increase in value and rate towards the end. If you have the closest or highest bid over the reserve price, you will win the auction and move forwards within 56 days.
Is Bidding Via An Online Auction Safe?
Bidding via an online auction is one of the most secure ways to buy a home. Most auction houses use specific software and have their auction platform. You should ensure that the auction house is a member of an Anti-Money Laundering Checks service, as this will ensure that they are on the ball with validating buyers and sellers.
How Would I Know If There Are Any Structural Issues With The Property?
During the house viewing process, surveying the property with your solicitor may be necessary. The auction house will already have carried out one, but to make sure that nothing is missed and no surprises later down the road, it’s essential that you get a survey completed.
How Can I Bid On Properties?
In an auction, you can carry out bids by proxy, online, and in-person bidding (if using a traditional auction).
A proxy bid is usually completed over the phone but can be done online in a modern auction, and is where you provide the auction house with a set amount of money you are willing to spend, and as the auction happens, your bids are automatically put into the system up until you reach your maximum bid pay. If the bidding finishes and you are the highest bid or the closest to the reserve price, you will win the auction.
Online bidding is generally on the auction platform or website. Every time the bid increases, you would increase your offer, but it’s essential to set a budget or maximum amount you are willing to spend as it can be highly competitive, and you do not want to regret overbidding if you win the property.
Person bidding is similar to online bidding, except you are physically in the auction room with other people also bidding. It’s essential to consider that there will be proxy bids made by people who cannot attend the auction.
Can I Bid On Someone Else’s Behalf?
You can bid on behalf of someone else, for example, your partner, family member or a third party. But, you will need the other person to write to the auction house’s written authority before the auction starts. This includes their name, address and proof of identities like a driving licence or passport.
Can I Make A Proxy Bid?
Yes, you can make a proxy bid on most auction houses — no matter which auction system you use. Some auction houses don’t accept proxy bids, so you should check their terms and conditions before the auction day.
How Does The Bidding Process Work?
The bidding process can either be online or in person, and both are highly competitive. The auctioneer will start at a low price and then either increase the price at low increments or high ones, depending on the reserve price set by the seller and the demand for the property. The bids will then start coming in to match the auctioneers’ increments until the auction period ends or everybody has been outbid.
How Long Will The Auction Last?
A traditional auction is made up of lots; one lot usually is one property and lasts anywhere from one to seven minutes on average. There are usually twenty to forty lots in an auction, and it can last for more than an hour at a time.
A modern auction lasts up to 28 days and is accessible from anywhere in the world, twenty-four seven.
What Are The Chances Of Bid-Sniping?
Bid-sniping or auction-sniping is placing bids to exceed the offer as late as possible. Bid-sniping is usually done during a timed online auction, giving other buyers no time to outbid the bidding sniper.
Bid-sniping is a common practice at auctions and although a modern auction may last days, the chances of it happening in the final seconds of a modern auction are pretty high.
Subscribe To Our Newsletter
Property Auctions Buyer FAQs – Post-Auction
How To Buy Unsold Auction Property?
If a property you are interested in does not sell at auction for whatever reason, you need to move fast. Interested buyers or bidders close to the reserve bid will be invited to make new bids and negotiate a price with the seller. If the auction house and seller approve these bids, they will move forwards with the exchange of contracts.
What Happens When The Gravel Falls?
When the gravel falls during a traditional auction, the exchange of contracts happens, and you will need to pay a 10-15% deposit — then there is a 28-day period for you and your solicitor to get all your documents and finances sorted before completion. This system is ideal for property investors, cash buyers and house flippers.
When the gravel falls in a modern auction, you will need to pay a 5-10% reservation fee, and then you have a 28 day period until the exchange of contracts, where you’ll pay another 5% deposit. And then, after another 28 days, you can complete. This system is ideal for people using a mortgage that need to carry out a mortgage valuation.
Property Auctions Seller FAQs
Are Property Auctions Worth It?
A sticky question with a tricky answer – yes and no. Property auctions can be worth it if the property you are selling is in demand, has tenants or can be renovated for much more than its current worth. Potential buyers are always looking for properties they can make a profit.
But, like any other route to selling a property, there is a risk that the property won’t sell. You should research the type of auction house you join and the types of properties that they sell to ensure you are selling to the right choir.
Can I Auction My Property?
Technically you can, but why would you want to? Most auction houses have established databases of property investors and potential buyers ready to bid on your property. They also have business models and structures to sell your property efficiently.
What Are The Fees At the Auction?
The auction house typically has fees of 2%+VAT of the final selling price, but this will vary from auction house to the next.
What Kinds Of Property Sell At Auction?
Properties of all different types, shapes and sizes sell at auction — there are also other types of auction houses that specialise in various types of buildings. To find the right auction house for you, you should check what kinds of properties are currently listed and see if they are similar to yours.
Will I Sell My Property At Auction?
There is no telling if your property will sell at auction; it all depends on the demand of your property type, the area and the auction house. It would be best if you always carried out thorough research before choosing an auction house, like checking Rightmove and Zoopla for sold house prices in your area.
What Kind Of Disbursements Will I Have To Pay When Selling At Auction?
Most of your fees will go towards your conveyancer’s time and effort. But there are extra costs known as disbursements which are administrative costs that go towards the necessary processes of a house sale. Usually, you would pay these an upfront fee; here are some of the main ones:
- Anti-Money Laundering Check.
- Title Register (Deed).
- Property Fraud Check.
- Bankruptcy Fraud Check.
- Searches.
- HM Land Registry Fee.
- Bank/Telegraphic Transfer (CHAPS) Fee.
- Pre-completion Check.
- Share of Freehold Acquisitions.
- If applicable – Leasehold Disbursements:
- Leasehold Sale Pack.
- Landlord Notice Fee.
- Deed of Covenant.
- Landlord Engrossment Fee.
- Certificate of Compliance.
- Notice of Transfer Fee.
- Notice of Charge Fee.
- ”Non-Standard” Expenses.
- Commission of Sale Price given to Auctioneer.
- Pay for room hire, marketing costs etc.
Would It Be Easier To Try to Sell My Property Via An Estate Agent?
It depends on the actual auction house or estate agent. Selling with an estate agent can take way longer than selling via a property auction and isn’t as secure as a property auction.
Can I Swap To An Auction?
Yes, you can swap to an auction if you haven’t exchanged contracts with potential buyers. You may also want to check your conditions with the estate agent or cash-buying company you are with, as they may have an exclusivity clause in their contract, meaning you cannot sell elsewhere for a month. If this is the case, you will need to wait for the expiration period before swapping to an auction house.
Can I Sell My Property With A Tenant In Situ?
Yes, you can sell your property with a tenant in situ. Most potential buyers on auction house databases are landlords or property managers looking for properties for their portfolios. You can even find auction houses that specialise in tenanted properties.
Property Auctions Seller FAQs – Marketing
How Should I Price My Property At Auction?
You should price your property at auction using a house valuation survey undertaken by your chosen auction house or estate agent. It would be best if you considered this valuation with a grain of salt as they may over-value your property to win your business. If you get multiple firms to carry out this survey, you can create an average price that may give you a more balanced asking price.
Where Will My Property Be Advertised?
Depending on the auction house, it might advertise your property on its website, its platform, and any property portals like Rightmove and Zoopla – this will give you exposure to 98% of all online home buyers. They will also send your property listing to their property investors’ and landlords’ databases.
Do Auction Houses Use Rightmove, Prime-Location, or Zoopla?
Yes, most auction houses work similarly in that they use Rightmove, Prime-Location and Zoopla to advertise your property.
What’s The Best Way To Set The Right Reserve And Guide Price?
The reserve price is a confidential minimum price set between you and the auction house and will vary depending on current market conditions, the demand from buyers and your house valuation.
The auction house will set the guide price much higher than the reserve price to build hype around your home on the market.
Will My Property Sell For Higher Than The Guide Price?
Your property will sell for higher than the guide price if there is demand for your property and there is a highly competitive nature during the auction process. However, this is not a guarantee, and your property may not even sell at auction.
Property Auctions Seller FAQs – Process
How Do Property Auctions Work in the UK?
After listing your property with the auction house, they will post it on their website or auction platform at least a month before the auction date. During this time, the auction house will market your property using open days and house viewings to gain excitement from potential buyers. They may also carry out a house valuation, and you will set an agreed reserve price.
The highest or closest bidder to your reserve price will win the auction; they will then pay a deposit or reservation fee, depending on the auction system.
How Long Will It Take To Sell My Property At Auction?
A traditional auction system could take anywhere from one minute to seven minutes during the actual auction to sell your property. A modern auction system could take up to 28 days to sell your property via an auction. Although, you can take pre-auction offers which will speed up the selling process significantly.
What Happens If The Property Buyer Pulls Out?
If a buyer pulls out after the exchange of contracts, they will face steep penalties from the auction house and forfeit the deposit/reservation fee they had placed on your property. You will still need to pay any solicitor or conveyancer fees.
Can The Buyer Try To Alter The Price Post-Auction?
The buyer cannot try to alter the price post-auction once the hammer has fallen. The sale price is fixed, and contracts are exchanged at the fixed price. If they try to renegotiate the price, they may be liable to steep penalties from the auction house.
Property Auctions Seller FAQs – Post-Auction
What Happens If My Property Is Not Sold At Auction?
If your property is not sold at auction, you may receive post-auction offers from interested buyers set up by the auction house. These bids are negotiable to please all parties involved.
If you do not receive any bids, the auction house could put your property onto the next auction, or you can withdraw from the auction house – fee free and try your luck elsewhere.
Subscribe To Our Newsletter
Tom is a Digital Content Writer passionate about sustainable property & property trends. Regardless of the subject, he will always write blogs of the best calibre. Read more about Tom here.
Be the first to comment