I’m buying a house at auction – what do I need to know?

30 May 2022 | Home, Property & Land | Author: Enel Ots

Is your perfect property being sold at auction? The availability of online auctions has made this an increasingly popular way to sell. Buying at auction means you won’t get gazumped and you could snap up a bargain as many properties are sold chain-free.

The first thing you’ll need to know is whether it’s an online conditional auction or a traditional, unconditional auction. Whilst you’ll get to buy the property if you’re the highest bidder, the process is slightly different for each type.

With an online auction, you can go and view the property and have access to all the legal documents before you make a bid. An online auction can last a couple of days or a few weeks. It’s a good idea to talk to a conveyancer and get a survey done if there’s time before the auction closes. You’ll also need to register to place a bid and provide documents verifying your identity.

If you’re the winning bidder in an online auction, you’ll have 56 days to exchange contracts and complete your purchase. This gives you time to sort out contracts and finalise your mortgage. When you buy at a traditional auction you only have 28 days to complete, which means that buying with a mortgage usually isn’t practical.

One of the main differences between the two types of auctions is that in a traditional auction you’re committed to buy as soon as the hammer falls. In an online auction you pay a non-refundable reservation fee at the end of the auction. This can vary but is usually around 5% of the total purchase price. If you change your mind, you lose the money. You’ll also pay stamp duty on the whole purchase price, including the reservation fee.

With a traditional auction you’ll still pay a reservation fee, but this doesn’t form part of the purchase price. You’ll also need to pay a 10% deposit.

Both auction type buyers should read legal pack first and are advised to consult a solicitor to go through the pack with them before they bid.

Fishers team of professional conveyancers can help to make your home buying experience as smooth and straightforward as possible. Find out more and contact us today.