Part 2 – A ProTen Guide on How to Buy a Property at Auction: Making Your Bid and Auction Day
18th July 2018
Categories Buying Property
In part two of our guide on How to Buy a Property at Auction, we look at what is involved with making your bid and what to expect on the day itself. If you missed Part 1, which covered everything from navigating through the terminology, to the various types of professional advice you might require, then click here.
Whether you are an investor, landlord, property developer or just a prospective buyer on the hunt for a new home, we wish you happy house hunting.
Q: Can I bid for the property remotely?
It is sometimes possible to bid over the phone, via the internet, or by proxy. You will need to check the Auctioneer’s own policies to see if they offer this kind of remote service and contact them to discuss your preferred means of bidding.
Q: Can I make a pre-auction offer?
As long as you have viewed the property and inspected all the relevant legal documents, you will usually be able to place a bid prior to the auction itself. The Auctioneer will often only accept pre-auction offers that are significantly above the top guide price.
Q: Will the Lot always be available on the day?
Sometimes, the vendor will accept an offer on the property before it goes to auction. To save yourself a wasted trip, always call the Auctioneer in advance of your visit to make sure the auction is still taking place!
Q: How do deposits work at auction?
Once you’ve made the winning bid, there’s no going back. You are legally obliged to see the purchase through. And as such, all deposits are payable on the fall of the hammer.
The deposit will normally be 10% of the purchase price, and you’ll need to part with this money on the day. We would suggest giving the Auctioneer your debit card details prior to the auction to cover your maximum bid. You can also arrange a banker’s draft or counter cheque, if you prefer.
You’ll then have up to 28 days to complete the transaction. If you can’t dot the I’s and cross the T’s during this time, you may be required to forfeit the deposit altogether.
If you are not paying in cash and are therefore relying on a loan from a mortgage provider, bear in mind that the lender is not legally bound to provide you with the finance to complete your purchase, even at the point of sale. If they pull out, and you can’t arrange another mortgage in time, you could lose your deposit.
Also, if you end up overbidding for the property and there’s a gap between the lender’s valuation and the price you have paid, you may need to pay for the difference yourself.
Q: Is there an administration fee and how is this calculated?
Most Auctioneers will charge an administration fee – sometimes referred to as a “buyer’s premium” – on top of the deposit. This covers all costs incurred by arranging the sale of the property. The fee can either be fixed at a flat rate, or it can increase in increments according to the sale price.
Q: What steps should I be aware of on the day itself?
- Registering your details
We would recommend turning up at least an hour before the auction to ensure you have enough time to register your details with the Auctioneer. You’ll need to provide them with your name, address, and the name of your legal representative.
Once the registration process is complete, you’ll be issued with a unique Bidding Number that can be used to express interest in the Lot during the auction.
- Supplying proof of your identity
Auctioneers are required to work in compliance with the Money Laundering Act, and so will need to see suitable photographic ID and proof address from you before they can consider your bid. They will often ask for a recent utility bill or bank statement, too, so they can verify that you are who you say you are.
If you are attending the auction on behalf of the buyer, or you are acting on behalf of a company, check with the Auctioneer as to the details you’ll need to supply during registration.
- How to bid
Often, bidding for a property is as simple as raising your Bidding Number to attract the attention of the Auctioneer. Make sure that the person conducting the auction can see you and make it clear that you wish to make an offer at a particular price point. Other indications, such as winking and nodding, could be misconstrued!
Q: What happens when the hammer falls?
Once the hammer falls and you have made the winning bid, you are entering into a legal contract and are therefore required to buy the property. At this point, you will need to provide the Auctioneer with the deposit, the administration fee and proof of your identity (as outlined above).
You and your legal representative will be required to sign the Sale Memorandum. You will also be asked to arrange any necessary insurance for the property as soon as possible.
If, for whatever reason, you cannot meet the Auctioneer’s Conditions of Sale at this point, he or she reserves the right to re-offer the Lot straightaway.
Q: What happens after the auction has taken place?
If you win a bid, it will take less than 28 days to complete on the purchase after this initial exchange of contracts. So expect things to move quickly!
If some Lots were unsold, the Auctioneer will make further details of these Lots available after the auction and will state the minimum price at which each one can now be purchased. You can submit a new offer at this stage. If the seller accepts, you’ll need to be in a position to exchange contracts immediately.
Don’t forget, that ProTen Services are specialists in damp proofing and property preservation. We are on-hand to help you get your property in tip top condition. We can support with diagnosing a damp problem, carrying out structural repairs, to waterproofing a basement and property maintenance. Visit our website for more information on the range of property preservation services we provide or click here to arrange a survey.
And if you haven’t done so already, click here to read Part 1: Getting Prepared for Auction in our Guide on How to Buy a Property at Auction.