Buying and Selling at Auction UK
Property Auctions can be a very useful method for buying and selling houses and property in the UK. There are a number of regional and national auction houses and the process can be quite different from the usual route of purchasing through an Estate Agent. If you are not an experienced investor we recommend doing some detailed preparation and research prior to buying a house or property at auction.
Property Auctions Q & A
Buying at Auction
The auctioneer announces each lot and controls the bidding, deciding where to start and at what increments the bidding will increase. You can signal your intent to bid by raising your hand or catalogue. When there are no more competing bids the auctioneer will give a warning and then if no further bids are forthcoming, declare the property SOLD! If you are the winning bidder you will be required to complete a purchasor’s slip and provide a deposit – please check what deposit amount (usually ~10%) and identification required prior to going to auction. You will usually have to pay a buyers fee in addition to the deposit at the end of the auction.
Selling at Auction
House auctions provide a very quick and efficient way to sell your house due to the deadline and strict buying restrictions that an auction operates under. When a property is declared sold by the auctioneer a legally binding contract comes into effect between buyer and seller – this contract includes agreement over the price and terms which cannot be re-negotiated subsequently. In an Estate Agent-led house sale process this level of commitment would not occur until the exchange of contracts, which can be weeks or months after the initial offer is made and accepted.
Property Auctions Q & A
Q. How much does it cost to sell a house at auction?
A. Auctioneers usually charge a fixed entry fee plus an amount on completion as a percentage of the achieved sale price (around 2 – 2.5%).
Q. How is the contract formed?
A. Subsequent to receiving a winning bid, a Memorandum of Sale is completed in the auction room which is the signed by the buyer. The memorandum of sale is sent to both parties’ conveyancing solicitors who arrange for completion of contracts.
Q. What if my property doesn’t sell on the day of auction?
A. It is fairly common for properties not sold on the day to receive subsequent offers, sometime below the auction guide price/ reserve. Many auction houses continue to market properties if they are not sold at auction.