If you are a first time visitor to a property auction, then they can be daunting. Because of this, we have compiled a step-by-step guide that we hope will demystify the property auction process. The thing to remember is that auctions are just an alternative way of buying property - it's as simple as that! However, there are some things you need to know:
What is the guide price?
A guide price is the auctioneer’s estimate of what a property might sell for. It’s not the reserve price or the property’s true value, and it’s the buyer's responsibility to decide how much to bid.
Guide prices are an indication of the seller's minimum expectation and may change before the auction. Properties typically have a reserve price, which is usually within 10% of the guide price. Always confirm the guide price with the auctioneer before bidding.
What is the reserve price?
Each lot has a reserve price unless stated otherwise. This is the minimum amount a seller is willing to accept for their property. It's a confidential figure agreed upon between the seller and the auctioneer, meaning it's not disclosed to potential bidders. If the highest bid doesn't reach the reserve price, the property won't be sold during the auction, and the seller is free to negotiate a sale afterwards.
What is the legal pack?
An auction legal pack is a collection of documents that provides potential buyers with key information about a property being sold at auction. It's designed to help them make an informed decision before placing a bid. This pack is usually prepared by the seller's solicitor and is made available to potential buyers before or during the auction. This is essential reading and due diligence is advised.
Always check for a Buyer's Premium or other fees that may apply to the seller’s costs. Factor these into your budget and ask your solicitor about them first. Don't bid until you're clear on all costs, not just the property's sale price. Additional costs, excluding the admin fee, are typically listed in the Special Conditions of the legal pack and are due on completion. Stamp duty and taxes are not included, so make sure to do your own research.
What is the property auction addendum?
An addendum is extra information provided by a seller’s agents or solicitors after the legal pack has been prepared. It might show changes to the property description or other information, which may affect buying decisions.
Please read our step by step guide to help you fully understand the auction process.