We often have clients ask about buying at an Auction, and with that in mind, we have put together a mini guide.
Firstly let’s start with differentiating between “Traditional Auction” and “Modern Auction”.
This is probably the most familiar type of Auction buyers have heard about. This normally takes place at a physical location, and bids are usually accepted in person, through online bidding, or via a representative that relays your phone bids.
One of the key differences between Modern Auctions, and Traditional is the deposits, contract exchange, and completion.
Normally at a Traditional Auction, the buyer will need to put down a non-refundable 10% deposit, and exchange contracts within 28 days.
Modern Auction differs in that they can take place from the comfort of your own home, or office. Bidding is carried out online, and there is usually a closing time for bidding to end.
When a bidder is successful, there is normally a reservation fee payable, this is typically non-refundable. The fee should not be confused with a typical deposit, as it is usually in place to cover Auction costs, and could be as much as 5% of the property price. It is important to note, that the fee could also be included in the total property price and may increase the stamp duty due.
One of the benefits of buying through a Modern Auction is that the timeframe to secure funding and complete the purchase is usually as much as 56 days.
It’s important to do your research, think about looking through legal packs, the type of property that you are interested in buying, and ensure that you understand the bidding process.
Advice from a Solicitor
Occasionally land or properties could have covenants attached to them, so it would be a good idea to speak to a solicitor for some advice about the Auction property. Ask your solicitor to look through any legal packs or if one is not available contact the Auction house to see if they can acquire one from the seller.
Don’t Bid First, Don’t Bid More than you can Afford
Once the Auction starts, we suggest that you try not to make the first bid, also when bidding keep in mind your budget, as if you bid over your budget, you have a limited amount of time to find the additional funds, but also dependent on the type of Auction you are bidding in, this could increase the deposit or reservation fee payable on the day, and once the gavel has fallen the winning bid is binding.
Need Auction Finance
Interested in Auction Finance? Journey Mortgages can help you with loans for Auction properties. Get in touch via our contact section and we will be happy to take look at what is available.
Attention: Late repayments can cause you serious money problems. For help go to moneyhelper.org.uk