Property Auction Day
Property Auction Day: Your Ultimate Guide
Ever thought about snapping up a dream property at an auction? It’s an exciting adventure! Whether you’re a seasoned investor or a first-timer, property auctions can offer great opportunities. Here’s your step-by-step guide to make the most out of property auction day.
Preparing for the Auction
Guide Prices and Maximum Bids
First things first, keep an eye on the 'guide price' listed in the catalogue. It’s a rough estimate of the property’s value but can be quite different from the final selling price. The key here is to decide on your maximum bid based on your research and budget, not just the guide price. You can ask the auctioneers to keep you updated on any changes to price, by providing them with your email address or phone number. Remember to go through the legal pack with a fine tooth comb – ask your solicitor to check it thoroughly and advise you of any concerns and all the fees that will be incurred in addition to the property sale itself.
Personal Tip: I once attended an auction where a friend set a clear budget and ended up winning a fantastic property below her maximum bid. She was thrilled and relieved she had stuck to her budget.
ID Requirements and Registration prior to Auction
When you decide to register to bid, you will be requested to provide proof of who you are. Under the Money Laundering Regulations 2017, auctioneers must verify the identity of all buyers. Prior to the auction day (normally at least 48 hours before), you will need to provide one form of government issued photographic identity (passport, driver’s licence), and a utility bill addressed to at your home address, dated within 3 months of the date of the auction.
If you are acting on behalf of another party, you will be required to provide the documents detailed above for both yourself, and certified copies for the named Buyers for whom you are acting, as well as providing a valid letter of authority from the Buyers authorising them to bid on their behalf.
You also need to provide your email address and telephone number.
Payment Methods and Process
Depending on whether the auction is in-room or on-line will determine the payment methods and process involved. You will need to check carefully on the auctioneer’s website or contact them directly to confirm exactly what to do and how it works, especially if you’re the successful bidder.
If bidding online, you will be asked during Registration to enter credit/debit card details for the payment of the ‘holding deposit’, which will be debited immediately, if you win the property. Make sure you ask the auctioneer how much this holding deposit will be and so you have the funds available to cover the cost.
Following your successful bid, you will then be contacted by a member of the auction team for the balance of the full deposit, which is normally 10% of the purchase price, together with any additional fees that are attributed to that specific lot e.g. administration fee, buyer’s premium - so, again, make sure you have the funds in place to cover everything before you bid!
Cash will not be accepted at any auction room, due to anti money laundering regulations.
You will also need your solicitors/licenced conveyancers’ details for the Memorandum of Sale (this is part of the auction contract of sale).
More Items to Consider
While the essentials are crucial, there are a few more items that can make your auction day smoother if you’re attending an in-room auction:
- A Mobile Phone and Charger: In case you need to make quick calls to your solicitor or check information online.
- Notebook and Pen: To jot down important information or changes that occur during the auction.
- Water and Snacks: Auctions can be long, and staying hydrated and energized is essential.
- Comfortable Clothing: Dress in layers as auction rooms can be unpredictable in temperature.
Tip: Once, I saw a bidder lose out on a property because he had to leave the room to get a drink. Stay prepared!
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The Auction Day has arrived!
Check out the Addendum Sheet
Before the auctions starts, make sure you look at the addendum sheet or listen out for announcements by the auctioneers. The addendum lists any late alterations, guide price changes, withdrawals, or prior sales. It’s crucial to read this before bidding to catch any last-minute updates.
Personal Experience: At one auction, I saw a property’s guide price drop significantly on the addendum sheet. It ended up being a great deal for the lucky bidder who noticed the change.
Familiarising Yourself with the Environment
If you’re attending an in-room auction, take a moment to familiarise yourself with your surroundings. Locate the auctioneer, the screen displaying lot numbers, and the seating arrangement. This can help ease any nerves and make you feel more comfortable.
Tip: Arrive early. It gives you time to settle in and get accustomed to the environment without feeling rushed.
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Understanding the Auction Process
Start of the Auction
The auction will start promptly at the time printed in the catalogue or advised online. The auctioneer will make several announcements about the procedure, summarised in the first pages of the catalogue. Lots are offered in the order they appear in the catalogue and withdrawn or pre-sold lots are announced as well.
Observation: It’s fascinating to watch the auctioneer at work. Their speed and precision are impressive, and understanding their rhythm can help you bid more effectively.
Prior Sales and Unsold Lots
You can place an offer on a property before the auction date, but the vendor isn’t obligated to withdraw it from auction until contracts are exchanged. Vendors usually set a reserve price, the minimum acceptable bid, and if a property isn’t sold during the auction, you can often make an offer afterward. Leave your details with the auctioneer, who will discuss them with the vendor.
Tip: Always leave your details with the auctioneer for unsold lots. You might get a second chance!
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The Bidding Process
How to Bid
The auctioneer will announce each lot and refer to any last-minute changes. The current lot number is usually displayed on a screen next to the auctioneer (you can usually view this if watching the auction online as well).
When bidding in the room, make yourself clearly visible to the auctioneer and indicate your bid with a nod or raised hand. Subtle gestures like twitches and winks might go unnoticed.
If you’re bidding online, make sure you act fast, and don’t hesitate for too long, as the auctioneers work quickly, and you might miss out on your bid. The auctioneers will normally give a couple of seconds in between bids and will give notice of the property selling or – not meeting the reserve price – and therefore going unsold.
Story: A first-time bidder once shared with me how nervous she was, but she won her bid by confidently raising her hand. It’s all about being clear and assertive!
Tips for Effective Bidding
- Stay Calm and Focused: Auctions can be intense, but keeping a cool head will help you make better decisions.
- Watch the Auctioneer: They often give subtle hints when the bidding is about to close.
- Stick to Your Budget: It’s easy to get caught up in the excitement but remember your maximum bid.
Personal Tip: Once, I saw a bidder get carried away and spend far more than he intended. He later regretted not sticking to his budget.
Winning the Bid
Once the gavel falls, a legal and binding contract is formed between the vendor and the highest bidder. If you’re the successful bidder, a 10% deposit is due immediately, with the remaining 90% usually required within 20 business days. As mentioned above, make sure to ask the auctioneer when any other additional fees will be debited, and be sure to know exactly how much they are.
Reminder: Stick to your budget! It’s easy to get carried away in the excitement but remember your limits.
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After the Auction
Paperwork and Additional Payments
Remember, prior to auction, to check with the auctioneers and within the legal pack as to what additional buyer’s fees will be added to the property sale, if you’re the successful bidder. They vary depending on the type of auction, the type of property and the auction house.
Most fees can be determined beforehand by asking the team but be aware that you might have to include any of the following: administration charge, reservation fee, buyer’s premium, property related fees, and buyer specific fees (Buyers may be required to reimburse the cost of searches and occasionally other costs too; all such requirements should be contained within the Special Conditions of Sale).
All these costs will be payable on completion. Any stamp duty and/or government taxes are not included within these Special Conditions within the legal pack, and all potential buyers must make their own investigations.
Tip: Keep a copy of all documents for your records. It’s essential for tracking your purchase and any follow-up actions.
Finalising the Purchase
You’ll receive a copy of the contract, notices, and general conditions of sale. Pass these to your solicitor. Completion typically takes place 20 working days later, under your solicitor’s supervision. Arrange building insurance immediately after the sale, as the property is at your insurable risk from this point forward.
Important Note: Properties bought at auction are not sold "subject to contract", "subject to finance", or "subject to survey". They’re sold unconditionally, and you’re legally obliged to complete the sale.
Arranging Building Insurance
As the new owner, it’s your responsibility to arrange building insurance as soon as possible. The property is at your risk from the moment the gavel falls, so don’t delay.
Personal Experience: I once knew a buyer who delayed getting insurance and faced significant issues when unexpected damp damage occurred. Learn from their mistake!
Dealing with Unsold Lots
If a property doesn’t meet its reserve price and isn’t sold during the auction, it might still be available for purchase afterward. Here’s how to handle it:
- Express Interest: Let the auctioneer know you’re interested in an unsold lot.
- Negotiate: You might have room to negotiate a better price since the property didn’t sell at auction.
- Follow Up: Stay in touch with the auctioneer for updates.
Tip: Unsold lots can be great opportunities. Don’t be discouraged if your first choice wasn’t sold during the auction.
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Final Tips for Auction Day
Know When to Walk Away
It’s important to know your limits. If the bidding goes above your maximum budget, be prepared to walk away. There will always be more opportunities.
Reflect on the Experience
After the auction, take some time to reflect on the experience. What went well? What could you improve for next time? This will help you become more confident and effective in future auctions.
Personal Reflection: After my first auction, I realised the importance of preparation and staying calm. Each auction is a learning experience, and the more you participate, the better you’ll get.
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Conclusion
To wrap things up, attending a property auction can be an exhilarating experience. Preparation is key—gen up on the auction process, know your budget, have all your documents ready and register well in advance of the auction day. Auctions offer a unique opportunity to purchase properties, often at competitive prices. By following this guide, you’ll be well-prepared for property auction day, ready to bid with confidence, and equipped with the knowledge to secure your next property. Happy auctioning!
Find your Perfect Auction Property Today!
Feeling ready to dive into the thrilling world of property auctions? Explore our upcoming auctions and take that first step towards finding your dream property. If you have any questions, don’t hesitate to get in touch. Happy bidding!