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Property Auction: A guide to buying a property at auction, and how we can assist with mortgage funding!

A property auction, where a buyer can purchase a property at auction, could save the astute homebuyer up to a third off the price or even more!

Here we explain more about how a Property Auction works, plus the advantages, disadvantages and 'do's and don'ts' of purchasing a property at auction, along with information and help as to how we may be able to assist with the funding of a property bought at auction.

What is a property auction?

So 'What is a property auction?' you may well ask. Well, a property auction is an auction held to sell property, whereby a bidder could save up to a third off the price, or even more, and this could represent literally tens of thousands of pounds!

Properties are usually sold at auction for one of three reasons:

  • the property has been repossessed and a quick sale is required, or
  • the property may have development potential, or
  • the property has been on the market for some time, and may be proving difficult to sell

Advantages of property auctions:

Well, there are a number of advantages when it comes to buying a property through auction, but the main one simply has to be the potential to save tens of thousands of pounds on the value of the property!

Also by buying a property at a property auction, contracts are exchanged when the hammer falls, cutting out some of the delay that may occur through a regular house purchase.

Disadvantages of property auctions:

Unfortunately buying a property at auction is not all plain sailing, it certainly has its downsides.

Unlike the conventional method of purchasing a house, if you are considering buying at a property auction, there are certain preparations you must attend to before you can bid for a property that you may be interested in purchasing.

Unless you are a cash buyer, you must make an application for mortgage funding. You cannot bid without having a firm offer of mortgage from a mortgage lender. This will entail you outlaying money on a transaction that you may not be successful in. Thus you will need to speculate on:

  • a full structural survey on the property you are interested in
  • and having your legal representative carry out the usual searches to ensure that if you were successful in your bid, you would gain good title to the property.

You must remember that even though you may have spent money on a full structural survey together with search fees and solicitors costs, there is of course no guarantee that your bid will be successful.

How do property auctions work?

So, how does a property auction work. Well most property auctions are either held at the Auctioneers' salesrooms, or in some cases, at the property itself. Prospective buyers will assemble at the auction, and should have an idea as to the maximum bid that they are prepared to offer, or will be restricted by the amount that they can finance on mortgage. Remember, it's very important that you don't get carried away - you must not exceed your ceiling price!

If your bid is successful, at the drop of the Auctioneer's Hammer, you will be legally committed to purchasing the property. At this stage, you will be expected to pay over to the Auctioneer a deposit of 10%. Similarly, the vendor is legally bound to sell the property. You should advise your solicitor, who will already be aware of the urgency of carrying out his legal work.

It's worth noting that from here on in, the completion of the transaction will run along exactly the same lines and procedures that a normal purchase would take. However, the main benefit is that there is no property chain, and therefore because the valuation has been undertaken, the appropriate property searches have been carried out, and the mortgage has been agreed, a speedy completion can realistically be expected.

Remember, as the purchaser you must complete the transaction within a 28-day period.

Where will I find details of property auctions?

There are lots of sources where you may find details of properties that are up for sale through a property auction including:

  • local estate agents
  • local newspapers
  • the internet
  • note "For Sale" boards on properties you may be interested in that are to be sold at auction

Important 'Do's and Don'ts' of Property Auctions

Remember, the whole essence of buying a property at auction is speed! But you should still act with caution in your dealings.

On no account should you commit to purchasing before you:

  • have had a property survey carried out
  • can pay a 10% deposit on your ceiling price on the drop of the auctioneer's hammer
  • have funding agreed for the balance of the purchase price

Can Shire Direct help if I want to buy a property at auction?

Usually yes we can! However, this will of course depend on the property you wish to purchase, and the provision of funds to buy it with.

So speaking with one of our specialist mortgage advisors is probably your first step. We will quickly assess your circumstances, and explore all the options that may be available to you. A rapid in-principle decision will follow.

Remember, we can usually help in most circumstances, whether you have a property to sell and require bridging finance, or you are relying on your deposit plus a mortgage, we will examine the avenues that may be open to you. It may be that you are self-employed without accounts, or have an adverse credit history.

So, whatever your requirements and needs are, we are here to help!

Hopefully, we've managed to explain property auctions, and what an attractive prospect they can be. Why not call us now in confidence on Freephone 08000 282 281 (our lines are open every day until 10pm, including weekends) and speak with one of our professionally qualified specialist mortgage advisors, or why not enquire online anytime! We assure you of a friendly welcome, and professional treatment every step of the way.

Enquire Online now, or call us today 08000 282 281 - our freephone lines are open 8am-10pm everyday! We'd love to hear from you!

The overall cost for comparison is 9.8% APR.
The actual rate available will depend upon your circumstances. Ask for a personalised illustration. APR variable and based on a usual case. Most customers are likely to receive a lower rate or the same rate as our overall cost for comparison rate - learn more about APR.

There are no upfront broker fees.
However, a fee may be charged on successful completion. An indication is that on conforming cases (straightforward applications with no or minimal adverse credit) a fee may be charged of up to 1% of the amount advanced, typically £795 and will depend on your circumstances.
For non-conforming cases (where case research and processing may be more complex due to adverse credit or unusual circumstances), a fee may be charged of up to 3% of the amount advanced, typically £1,995.

THINK CAREFULLY BEFORE
SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

Adding existing debt to your mortgage will increase the repayment term and overall cost.

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