Top tips for buying a property at auction
Buying a home at auction can avoid the usual drawn-out process and buyers may be able to bag a bargain. But there are several things to consider before, during and after when buying at auction.
James Emson, president of the National Association of Valuers and Auctioneers (NAVA) Propertymark, said: “Although there are many things to consider when buying an item at auction, it’s a chance to have fun and it really doesn’t need to be complicated.
“If you do your homework, familiarise yourself with the lot you want, the terms and conditions that apply and are clear with your bids, you’re in with a great chance of success and maybe getting your hands on a bargain.”
Below, NAVA Propertymark has pulled together a list of the top things you need to know about buying at auction:
- No backing out if you are the buyer
If you’re the highest bidder, you can’t change your mind after the fall of the hammer and you must pay for the item. With experience of online auctions, such as eBay, you see people sometimes changing their mind and backing out of the sale. This doesn’t apply at a property auction. If you pull out of the sale at auction, you could face huge costs, or be taken to court.
- Consumer Contracts Regulations
If you buy an item online, whether it’s via a store with a high street presence, or through an online marketplace, it falls under the Consumer Contracts Regulations. This means in some cases, you can return the item for a full refund under the Distance Selling Regulations.
However, at a real-life auction you can view the item in advance and choose whether to bid, so therefore you won’t be protected by this law, even if you bid via live webcast.
- Read the small print
The most important piece of advice for those buying at auction is to check the terms and conditions of the auction house you choose to use – you need to follow their terms and by entering a bid you are agreeing to them. Particularly when buying a property at auction it’s important to do this.
You will be required to pay the deposit and any administration charges immediately, as well as the balance of the purchase price usually within 20 business days, so you should familiarise yourself with what needs to be paid, and when, so you don’t face any unexpected costs. Chattels sales will invariably have a buyer’s premium to pay over and above the hammer price and the goods being sold may be subject to VAT too.
Sellers at auction may set a reserve price with the auctioneer – a figure which the lot cannot be sold below. Any auction guide or estimate must not be placed below a fixed reserve as that would be misleading to bidders.
- Protect yourself
When buying at auction, it’s important to choose a regulated auctioneer, such as NAVA Propertymark Protected auctioneer so you know you’re dealing with a qualified professional. This will also guarantee any monies you pay will be held in dedicated auction client accounts to protect both you and the seller alike.