Buyer's Guide: Preparing to Bid at Online Property Auction
The basic principles behind buying a property at auction are reasonably straightforward; a property is put up for sale, bids are taken from potential buyers with the lot eventually being sold to the highest bidder. However, there is more to an auction than the bidding process itself, and for those unfamiliar with how it works, it can all seem a little overwhelming.
Having a sound understanding about how the auction process works will ensure you get the very most out of your auction experience. When buying property at online auction, the process can be broken down into three main phases; before, during, and after the sale. In this article auctioneer Rob Limbert explains the key stages and how the process works when buying property at auction so that you can be fully prepared for every step of the auction process.
Keep an Eye Out for Lot Releases
Throughout the month prior, auction lots will be added to our property search function daily. This gives you details of the upcoming lots including the guide prices. Sign-up to our newsletter to receive the latest Pugh alerts, so you are made aware when the auction listing goes live and when new properties are received to market as this happens as-and-when.
Do Your Due Diligence
If you are looking to purchase a property at auction, you should treat this information as the basis from which to conduct your own research and due diligence rather than viewing it as your main source of information.
Contact the auction house and arrange viewings for any properties you are interested in. Feel free to take along a surveyor or a builder for advice, and also seek the advice of a local estate agent to find out its true value on the open market.
Make Sure You Know the Legal Stuff
If you are interested in bidding for a property, you should also request the legal pack from the auctioneer and have a solicitor read through this. You may also want to arrange for a chartered surveyor to carry out a buildings survey or structural survey on the property.
Have Your Finances Arranged
Before the auction you should ensure your finances are arranged. One of the major benefits of buying property at auction is that the process is much quicker than other traditional purchasing methods; once the gavel falls the sale is agreed and the highest bidder agrees to complete on the purchase (effectively the exchange of contracts takes place). You will need to provide a 10% deposit for the property on the day of the auction, and if successful to pay the remainder within 28 days of the auction finishing. Therefore, it is important to make sure your finances are in place.
Be Cautious of Changes
In the run up to the auction, you should keep checking the auction listing to see the status of the lot/s you are interested in. Offers are made before the auction day as savvy property buyers try to gauge the vendors appetite for selling, so they may have been sold prior to the auction. In some circumstances a lot may be withdrawn - for example if the legal pack isn't complete. You should also check to see if there have been any addendums (changes to the property listing).
Register to Bid
So, you have viewed the property you are interested in, you have done your due diligence, you have your funds in place and you are ready to register.
When you find a lot you're interested in, click 'register to bid.' You'll be directed to an online bidding form, to upload your ID documents with your contact and payment details. A member of our team will then verify your application.
After verification, we will pre-authorise your bidding deposit. The bidding deposit is £2,000 per lot you have requested to bid on, or £500 if the lot is offered as a nil reserve. Pre-authorisation is carried out on the week an auction commences. When your pre-authorisation is successful, you'll be sent an email link to the bidding platform.
Remember, once the 'hammer' comes down and time is up, the sale is agreed and the property is yours. Therefore it is absolutely crucial to do your preparation in order to get the most from your online property auction buying experience.
During The Live Online Auction
If you've followed our buyer preparation steps, then bidding online is the easy part (hypothetically). Just make sure you have a reliable device and a strong internet connection.
Firstly, you need to decide on a time to bid. Whilst bidding opens for all lots at midday on day 1, you'll find that most of the action happens in the final few closing minutes - so bear that in mind when planning your strategy.
When bidding opens, follow the link emailed to you and you can enter your maximum bid and begin. You'll be able to see other bids in real time, unlike with private treaty sales, where competing offers are kept private.
What Happens After the Auction?
If You're the Winning Bidder
If you are the highest bidder, the pre-authorisation deposit amount will be retained towards the contractual deposit. A member of our team will contact you to arrange any outstanding premium amounts or shortfalls.
There is typically a 28 day completion period following this. It is during this time that legal and financial matters must be sorted out before the keys are exchanged and the sale completes.
As a buyer you need to ensure the property is adequately insured once the auction concludes as anything that happens to it from this point is the buyer's responsibility.
If You Were Outbid
If you aren't the successful bidder, the pre-authorisation deposit on your card will be removed.
If the property you were interested in did not achieve the vendor's Reserve Price, all is not lost and you may still be able to secure the property. If you are a buyer then make sure you speak to the auctioneer afterwards; it may be possible for you to increase your bid, or come to an arrangement with the vendor.
But remember, if you aren't successful, there is always next month! Online property auctions remain one of the most exciting ways to buy and sell property, so click here to see a list of all scheduled Pugh auctions or click here for our auction buying guide.