How to buy a property at auction

Buying a property at auction can be a great way to get a bargain or find the kind of properties or development opportunities not commonly offered through estate agents. It can also be a fast way to acquire property, with most deals going through within 28 days (or 20 working days) of the auction.

If you are considering buying property at auction for the first time, there are a number of things you have to bear in mind to make sure you have a positive experience and end up with a good deal you can afford.

Before the auction

Do your research

The auction house should release a catalogue of properties to be included in the auction around 2-3 weeks before the date of the sale. Make sure to study the auction catalogue carefully and identify any properties you are interested in.

You should then arrange to view the property. There will usually be several set times at which you can go and look around an auction property and you will not normally need to book an appointment. It is a good idea to ring up and check before going to a viewing, however, in case the property has been withdrawn or sold before the auction.

Due diligence

It is important to remember that once you have won a property at auction, you cannot back out if you later realise there is something wrong with the property you did not notice before the auction. It is up to you to make sure you are confident you have identified any issues before the auction date.

Make sure that the property matches the information provided in the catalogue and obtain a copy of the legal pack which the auctioneers should supply, usually as a download from their website. It is recommended to get a solicitor to check the legal pack before bidding on a property.

At the auction

Know your limits

Before the auction date, decide what is the absolute maximum you are willing to pay for the property or properties you are interest in. This should be based on what you realistically think the property is worth, your goals are for the property and how much finance you can raise, if necessary.

If you are buying property as an investment it is essential not to get carried away by the excitement of the auction day and end up paying too much as this could make it difficult to turn a profit.

How to bid at an auction

It is usually better to attend an auction in person wherever possible as it can allow you to judge the room and get a sense of how interested other bidders are in a property. If you cannot attend, proxy and phone bidding are usually an option and some auction houses will also allow you to bid online.

Auction rooms can often be very busy places, so you need to make sure the auctioneer knows when you are placing a bid. If it is your first auction, it is a good idea to get there early and watch how people bid on the lots before the ones you are interested in to a get a sense of how things work.

After the auction

What happens when you win a property at auction

If you are lucky enough to win one of the lots you choose to bid on, you will be taken through a contract room to fill out a purchase slip. You will also need to provide identification, so it is a good idea to check what the auction house will accept before the auction date.

You will need to pay 10% of the selling price as a deposit which in non-refundable. You will also need to pay an auction administration fee which will vary from auction house to auction house. Once the deposit is paid, you will normally have up to 28 days to pay the balance and complete the sale.

How to find auction finance

Although many people buying property at auction are making cash purchases, it is increasingly common for buyers to use auction finance to pay the balance of the selling price. It is not usually possible to secure a traditional mortgage fast enough to meet the deadline for finishing an auction purchase which is why bridging loans are so popular for auction purchases.

A bridging loan allows you to quickly borrow a large amount of money, secured against a property, so you can complete your auction purchase. You then have time to apply for a more traditional mortgage which you can use to repay the bridging loan. Bridging loans can also be helpful if the property will need significant renovations before it will qualify for a normal mortgage.

Things to consider when taking out finance

Bridging loans tend to come with relatively high rates of interest and as such are only intended as short term finance. Many lenders will only offer bridging finance for terms of 12 months or less, although some providers will allow terms of up to 3 years.

Because time is of the essence when dealing with auction purchases, it is usually a good idea to go through an experienced bridging loan broker. They will be able to expedite the process of finding a deal on bridging finance as well as helping you find the best rates available to make your auction finance as affordable as possible.

Get the best deals on auction finance

When looking for auction finance, most people want to access the money as quickly as possible with minimal fuss while getting the best deal possible on their interest rate and other considerations. This is why so many people use an experienced bridging loan broker to help make accessing the money they need at an affordable rate as fast and straightforward as possible.

Our team of expert loan advisors can help you find and secure the best deals on bridging finance from across the market. To find out more call us on 0117 959 5094 or request a callback