Bid for your dream home: Property Auctions Explained
If you hadn’t thought about auction for your next move, it might be time to reconsider. Recent UK data* shows that there has been an 11% increase in homes sold by online auction in the last 12 months alone. From would-be investors taking inspiration from hit shows like Homes Under the Hammer to first-time buyers looking at alternative ways to get onto the property ladder, more and more buyers, and sellers are exploring auction.
The hugely popular property portal Rightmove also highlights properties that are available by auction, as more buyers and becoming aware and confident with this method of purchase.
With that in mind, Jamie Cooke, Managing Director at iamsold, has given his top tips for buyers who might be ready to consider an auction home for their next move and want to find out more about the process.
How much does it cost to buy at auction?
A misconception of auction is that it’s only for one specific type of home, usually one that needs a lot of work! Whilst there are some renovators’ dreams available to buy at auction, there are so many different types of properties to explore, from city-centre flats, family homes, country cottages, church conversions and seven-figure showstoppers. There’s something for every budget at auction; whether you’re looking for a bargain or something spectacular, our highest value sale to date was a beautiful £2.4 million family home and our lowest was land for £100!
What are the risks of buying a property at auction?
Buying a property will always come with an element of risk. What’s great about buying a property at auction is that you get access to a lot of information upfront. We call this a Buyer Information Pack. The Buyer Information Pack will include documents such as a Local Authority Search, Water and Drainage Search, Mining Search, Property Information Form, Fixture and Fitting Form, Title Register and Title Plan; the things you’d usually find out later down the line during the conveyancing process when purchasing by Private Treaty (the way most people buy and sell their homes). Having this information upfront helps to give you as much information as possible so you’re making an informed decision, and it’s one of the reasons sales falling through are so much lower with auction.
How do you pay for an auction home?
The Modern Method of Auction, is designed with mortgages in mind, so you don’t need to worry about having the cash up front. In 2023, more than 40% of homes bought for a residential move with iamsold were purchased with a mortgage. Your Estate Agent will ask how you intend to fund the purchase, so speaking to a Mortgage Advisor in advance is recommended.
Who pays auction fees? Buyer or seller?
For the Modern Method of Auction, if the bid is successful, the buyer will pay a non-refundable Reservation Fee**. Once this has been paid, you will be sent the Memorandum of Sale which will outline the next steps in terms of paying the balance. Upon completion, you’ll also pay a Buyer Information Pack Fee.
With all property sales, it’s important to account for the cost of professional advisors, such as Solicitors, to access legal expertise and help smooth out the finer details of the property purchase.
The majority of our Partner Agents don’t charge sellers a fee, however It’s best to check with the individual Estate Agent, whether there are any seller fees to pay as this can differ from provider to provider.
How to bid on a house at auction?
Before bidding, preparation is key. A thorough knowledge of the will help avoid any unnecessary stress. Like the process of buying any other home, do your research. Have you explored the area? Is it close to the amenities that are important to you like work, family, shops, schools, or green space?
Once you’ve established that you’ve found your dream home and you’ve fully digested the Buyer Information Pack and understand the process, it’s time to bid! So how exactly do you secure your desired property at auction? Here are some tried and tested auction tactics.
- Bidding early will make your presence and interest clear. This indicates that you are serious about buying the house.
- Take note of when the auction ends, so you don’t miss the opportunity to place your bid. On average they are live for around 7-30 days.
- Always stick within your means, be fully informed of the process and communicate with your agent if you have any questions.