It's vital to understand as much as possible about how property auctions work when you're considering buying by this method. As a private buyer there are 5 main advantages of buying at auction over an estate agent.
There's equal opportunity, all interested parties on the day of sale have an equal chance of buying
There's no risk of being gazumped, because the property is sold on the fall of the gavel, and the contract is binding
There's no danger of the seller pulling out as the contract of sale is binding at the fall of the gavel.
There's more choice of properties at auction, including repossessions, properties in need of renovation, and those only available for sale through auction.
Because all legal work and surveys are completed prior to sale you can enjoy a speedy purchase and completion.
As a private buyer, you must consider four key issues before making your first serious bid.
Visit an auction to get a feel for the process. You can also ask the auctioneer any questions that you have. There's often only about three to four weeks between the auction catalogue coming out and the date of the auction, so you have to be prepared to move fast.
Finance - you will need enough funds to pay your deposit on the day of the sale - usually 10% of the total price, plus you will have to have your mortgage in place to pay the balance if you are successful, which is usually due 28 days later
You should get a survey done to ensure that the property is sound. If you are taking out a mortgage your lender will wish to have their surveyor assess the property prior to the sale date.
It is important that you are careful in your selection of the property because any survey costs are payable by you, whether you are successful on the day of the auction or not.
Research the market carefully to find the selection of properties in your price range, and arrange an early viewing with the auctioneer. To get information about auctions, you can order catalogues from individual auction houses, or subscribe to a specialist website or database. Remember that although many auctions are held regionally, some of the bigger auctioneers sell properties located in all areas at a major nationwide event, often in London.
Finally some tips to help you make an informed purchase.
If you're nervous about auctions, get your solicitor or surveyor to do the bidding for you.
Always set an upper price limit, and stick to it. It's easy to get carried away in the heat of the moment
Make sure your mortgage lender is satisfied with the valuation on the property, or you could face delays.
Don't buy a property without having a survey done
Don't buy a property unless you've sold or completed the sale of yours, if you're relying on that money to finance the new purchase.
With prices up to 40% cheaper than on the open market, property auctions are definitely the place to pick up a bargain, but you must be fully prepared to avoid the pitfalls.