Many people who are considering buying or selling a property may be unaware that
sale by auction may be as good or even better method than more conventional
means. Auction is becoming an increasingly attractive means of buying and
selling property. For the buyer it is a transparent process, the sale is binding
at the fall of the gavel and the completion date is fixed in advance. For
sellers the amount of competition at sales often means that auctions achieve
higher prices than private treaty sales. In general you should not seek to buy a
property at auction if your purchase is dependent on the sale of another
property on which the contracts have not been exchanged.
Before the Auction
1. You should obtain a copy of the auction catalogue from the auctioneers.
This may have information relating to the property as part of a "home buyers
2. After looking round the property yourself, consult a chartered surveyor and
if you wish to proceed, instruct them to carry out an RICS Homebuyers report.
This report will advise on the condition and value of the property and may also
suggest certain enquiries you should make, other specialist reports you should
obtain or indicate expenditure you may face over repairs. Ask for the Report to
be in your hands at least week before the sale.
3. Instruct your solicitor to inspect Local and National searches and the title
deeds for any onerous covenants, restrictions etc. Again, this Report should be
with you at least one week before the sale.
4. Ask the auctioneer at the outset if they have information relating to the
property since this could reduce your costs considerably. Otherwise you should
instruct your solicitor or chartered surveyor to make enquiries at relevant
local authorities regarding planning, building regulations, highways and any
other factors which might affect the property directly or indirectly, such as
new roads or redevelopment.
5. Discuss with your chartered surveyor the upper limit of the price you should
pay for the property.
6. Remember to take into account the cost of advice from the source lending you
money to buy the property as well as the fees for obtaining the professional
advice outlined above, stamp duty if applicable and the cost of work which may
be needed immediately after purchase.
7. Check what methods of payment the auctioneer will accept for the property. If
you are the successful purchaser, you will usually be required to pay a 10%
deposit. Subject to a minimum specified in the catalogue immediately after the
sale and should therefore have sufficient funds to cover this. It may be
necessary, for example, to make arrangements for a banker's draft prior to the
How does the auction sale work?
1. If you have any queries on the day of the sale ask the auctioneer or his
staff. They are more approachable than most imagine and are knowledgeable about
the properties they sell. Ask for a copy of the addendum for any changes to the
2. Your surveyor or solicitor can attend the sale and bid on your behalf.
This may be advisable if you are likely to be carried away by the proceedings
and bid over your upper limit.
3. If you do attend the sale, listen carefully to the opening remarks of the
auctioneer. Amendments may be announced which directly affect the property in
which you are interested.
4. Most properties are subject to a reserve price below which the auctioneer
cannot sell the property at the auction. It will be made clear whether the
property is being sold subject to a reserve in the catalogue or conditions of
the sale although the reserve price will not usually be disclosed.
5. Attend the sale and bid for the property up to but not beyond the price
you have previously decided is your maximum bid.
6. It is a popular myth that auctioneers mistake any casual movement for a
bid. Do not worry, auctioneers are able to distinguish between someone
scratching their head and bidding but, if for some reason a mistake is made,
tell the auctioneer straight away; do not wait until the end of the sale.
7. If you are the last and highest bidder at the fall of the auctioneer's
hammer, you are the successful purchaser and are legally committed to pay the
price you bid and complete the purchase.
8. No one can outbid you after the sale and the vendor is equally legally
bound to complete the sale on the day and under he terms stipulated in the
9. You will usually be required to pay your 10% deposit or a minimum
specified in the catalogue immediately after the sale and will sign the contract
in the saleroom. The date on which you will be required to pay the remaining 90%
of the price to complete the purchase will be stipulated in the contract
document and is usually within twenty-eight days of the sale.
10. Upon signing the contract you will be responsible for insuring the
property. If the property remains unsold after the auction i.e. your bid was
below the reserve price, speak to the auctioneer to register your interest
before leaving the saleroom. It may be possible to buy the proper by private
treaty at a price agreed with the vendor.
Selling a property at auction
If you are
considering the sale of your property by auction, you must be able to give
vacant possession at a fixed date, unless the sale is subject to tenancies, this
is usually four weeks after the date of the auction. You will therefore need to
have access to alternative accommodation and/or storage of your furniture and
1. Consult a qualified property auctioneer (MRICS/FRICS) who will advise you if
your property is suitable to sell at auction.
2. If the auctioneer considers the property suitable, discuss the procedure,
possible sale date, whether it will be included in the sale of other properties
and viewing arrangements.
3. Always obtain a copy of the auctioneers terms of business and read them
4. The auctioneer will discuss with you the likely sale price and reserve;
the price below which you do not wish the auctioneer to sell your property at
5. At this stage you should also discuss the cost of the sale and the rate
of commission charged by the auctioneer. You may be required to pay for special
advertising or the printing of a brochure. For example, a budget estimate should
be obtained from the auctioneer detailing expenditure and confirming the limit
of your commitment in writing. You should be aware that, if your property fails
to sell, you may be required to pay certain costs incurred and this should be
clarified before the sale.
6. Instruct a solicitor who will obtain the Title Deeds and prepare the
special conditions of sale required by the auctioneer. Local Authority and Land
Registry Searches may be put in hand for the use of prospective purchasers if
requested by the auctioneers.
7. Close to the date of the sale the auctioneer will discuss with you
whether the reserve price should be adjusted, either way, to reflect current
market conditions for your property and the level of interest shown by viewings.
8. If the bidding exceeds this figure your decision to sell at auction has
been justified. If the reserve is not reached the property may still be sold
privately, sometimes immediately after the sale to someone who has expressed an
interest at the auction.
9. If your property is sold at auction the auctioneer will sign the contract
on your behalf in the saleroom and collect a deposit from the purchaser, this is
usually 10%. Depending on the terms of the contract, the remaining 90% of the
price required to complete the purchase will usually be paid within twenty-eight
days of the sale.
10. The account from the auctioneer for commission and auction expenses will
usually be received by your solicitor who will pay it subject to your approval.
After paying off other outstanding charges such as your mortgage and solicitor's
fees, your solicitor will send you the balance of the payment or transfer this
into your personal account. How to contact an auctioneer.
Questions and answers
Q. What are the advantages of buying at auction?
A. There are several advantages to buying at auction; these include
Properties are usually available at a competitive price It is an open and fair
competition between bidders Once the hammer has come down neither the seller or
the buyer can withdraw and the process will be complete within a set time.
Q. What is a reserve price?
A. A reserve price is the lowest price the seller will accept. The existence
of a reserve price should be disclosed but the amount will not.
Q. What is a guide price?
A. Guide Prices are simply an idea of what price the property is expected to
sell for on the day. These often change in the run up to an auction so you
should contact the auctioneer to check these.
Q. Should I obtain a catalogue?
A. Yes. The catalogue contains details of the property and the General
Conditions of Sale and you should take the time to read these carefully.
Q. Can I bid via telephone or the Internet?
A. If you cannot attend the auction it may be possible to bid by proxy. This
can be done in one of three ways By telephone - the auctioneer will telephone
you during the auction In writing - you specify your maximum bid and the
auctioneer bids for you Over the internet - this is available from some
auctioneers and you should contact them directly Whichever route you chose the
auctioneer will ask you to complete a proxy bidding form and to deposit a cheque
large enough to cover the sale deposit amount based upon the largest figure you
intend to bid.
Q. Can I inspect the property before the auction?
A. It is usually possible to view the property before the auction. There are
often group viewings for popular lots. You should contact the auctioneer to
Q. What if I need a mortgage?
A. If you need a mortgage then you must obtain an offer in principal before
the auction day. Most lenders are familiar with the auction process.
Q. Do I need a survey?
A. Whilst we would recommend that you ask a chartered surveyor to undertake
a survey on your behalf before buying any property a survey is not mandatory. If
you require a mortgage you will however need to have a mortgage valuation prior
to the auction.
Q Should I contact a solicitor?
A Yes. Let your solicitor have a copy of the auction catalogue, he may wish
to contact the auctioneer and the sellers solicitor on your behalf.
Q. Can the catalogue details change?
A. There are occasionally last minute amendments to auction catalogues.
Amendments are available from the auctioneers website or from them directly. On
the day alterations would be printed as an addendum. You should stay in contact
with the auctioneer to be sure you are aware of any changes.
Q. Can properties be sold or withdrawn prior to auction?
A. Properties do sometimes sell prior to auction or occasionally are
withdrawn. You should check with the auctioneer the day before the auction to
confirm that the lot in which you are interested is still being offered.
Q. How do I bid at auction?
A. When your lot comes up the auctioneer will confirm the address, the lot
number and any last minute details or amendments. Make sure you are bidding for
the correct property. You can bid by raising your hand, catalogue or any
appropriate means. If you are bidding an amount that is different from the one
the auctioneer is offering you should shout this out. You should make it clear
to the auctioneer that you are bidding, however it is not true that an
auctioneer will mistake any casual movement for a bid.
Q. Do procedures differ between auction houses?
A. Yes. You should always contact the auctioneer prior to the auction to
discuss his procedures. For example some auction houses have a paddle bidding
Q. If successful at the auction what do I have to pay?
A. You must have your finances available on the day. If you make a
successful bid you will be asked for a 10% deposit (subject to a minimum amount
indicated in the catalogue of Conditions of Sale). Pre-written bank drafts are
usually made out for 10% of your maximum bid. You will also need to provide the
auctioneer with proof of identification and your solicitor's details. In return
you will be given a "purchaser slip" which you should take to the contracts desk
where you will sign the contract. A copy of this should be passed to your
solicitor without delay. The balance is payable on completion which is usually
28 days later.
Q. Who is responsible for insurance of the property?
A. You are responsible for insuring the property from exchange of contracts.
You should make arrangements in advance.
Q. What if the lot does not sell?
A. The lot may not have reached its reserve price and is withdrawn from the
auction. It is worth approaching the auctioneer to discuss this, as it may still
be possible to buy the property privately.
Q. How can I find out what is coming up at auction?
A. You can contact individual auctioneers for their catalogues. Details of
auction results and forthcoming auctions are available in the property press;
both Estates Gazette and Property Week have auction pages every week.