Auction Buying Guide
Property auctions are excellent opportunities to buy a house or flat for a reduced price compared to what it would sell for on the market. To help you secure your chosen lot for a superb price, we have written this guide to buying property at auction. It gives you everything you need to know from keeping up to date with new auctions to capitalising on unsold lots.
How do I find out about the auctions?
Strettons have been conducting regular property auctions since 1937 and if you wish to receive copies of further catalogues you may call our auction department number on 020 7637 4000. If you provide us with your details and the type of property you’re considering buying at auction, we will send you the catalogue for our next relevant sale, which is usually published about one month prior to each auction.
What types of property are included in an auction?
The catalogue will provide information on many lots including a selection of houses and flats throughout the country, although the majority of properties in our auction catalogue tend to be situated in Greater London and the Home Counties.
Will you help me with guidance on prices?
Guide prices are printed in the catalogue. This is an estimate of the range within which the property is likely to be available at the time of printing. These guides may vary during the pre-auction marketing, but latest figures may be obtained by calling us on 020 7637 4000.
Can I view the properties?
If any properties are likely to be of interest to you within the guide price range given, then we can arrange for you to inspect. This may be by either the loan of keys (for which a refundable deposit will be required), by opening up the property for group viewings, or sometimes (where we have a joint auctioneer) for a local agent to meet you at the property.
If I like a property, what next?
A successful bid at the auction means an exchange of contracts, so it is extremely important that you are properly prepared.
Arranging a mortgage
If you require a mortgage it is essential that you obtain an offer of advance before the auction. Most Building Societies and Banks have now become accustomed to auction procedures and are able to issue such an offer within the relatively short time scale involved. You should, however, make your mortgage application at the earliest opportunity.
When do I instruct my solicitor?
Usually, we have copies of important legal documentation at our auction office, and these are kept available for inspection by prospective buyers. You should show a copy of the auction catalogue to your solicitor and he will tell you what additional information he may require. All legal documents are available for inspection/download on our interactive auction website.
What about my surveyor?
If you require a structural survey of the property then we can arrange for your surveyor to have the necessary access. Your Building Society may, in any event, wish your own surveyor to inspect.
When do I need my deposit?
If you are successful in the bidding you will be required on the auction day to provide the auctioneers with a contractual deposit of 10% of the purchase price. This should normally be in the form of Debit Card, Bank draft, or Building Society cheque (i.e. a cheque issued by your Building Society, not your personal cheque on a Building Society account). Cash deposits cannot be accepted.
Your bank draft or Building Society cheque must be made payable to “Strettons”. If it is pre-written then it should be made out for 10% of your likely maximum bid (minimum deposit £2,000). This deposit must include (in addition) a Buyers Administration Fee of £895 (Inc. VAT). If you succeed in buying the property for less at auction then Strettons will issue you a cheque to refund any overpayment. If an additional deposit is required the auctioneer will normally accept your personal cheque for the balance.
Could there be any late changes?
Sometimes there may be amendments necessary to the information given by virtue of facts, which have become known, to us subsequent to the publication of the auction catalogue. It is advisable therefore to contact the auctioneers about a week prior to the sale to ensure that there are no alterations, which may affect your intended bid. If you inspected the Legal Pack via our auction website then you will receive automatic notification of any changes.
Very occasionally lots may be withdrawn or even sold prior to the auction. It is therefore recommended that you check with Strettons on the working day immediately prior to the auction to ensure that your particular lot is still to be offered.
What happens on auction day arrival?
Lots are normally offered in the order in which they appear in the catalogue, although you should check with the auctioneers in respect of any late entries (normally on loose-leaf sheets), as they are not always offered at the end of the sale.
Check the start time from the catalogue. Even if your lot is likely to be offered later, it is advisable to be at the auction at the start so that you can listen to the auctioneer’s opening announcements.
Late alterations to the catalogue are usually printed on an Amendments Sheet, copies of which are available as you enter the auction room. If your lot is affected by any amendments and you have any questions, members of Strettons auction department are available in the auction room to assist.
All relevant legal documentation, which was previously held at Strettons auction office, will be also available for inspection in the auction room. If there are any last minute things, which you would like to check upon, then once again ask a member of Strettons auction department. An independent firm of solicitors will also be in attendance if you require legal advice.
When your lot is announced and the auctioneer invites bids it is very important that you make your interest known. You can do this by calling out, by raising your catalogue or your hand in the air, or by any other appropriate means. Once the auctioneer is aware of your interest he will usually endeavour to refer back to you if looking for subsequent bids, as you are of course likely to be in competition with other interested parties.
Before a property is “knocked down” the auctioneer will normally give you notice of the intending fall of the hammer - usually by saying such words as “Going for the first time.... going for the second time.... SOLD”.
Occasionally a potential buyer may lose a property by waiting too long - so don’t delay until the last moment, as after the gavel has fallen you will be too late!
On the fall of the auctioneer’s gavel, contracts are effectively exchanged. If you are the successful bidder a member of Strettons auction team will come to you with a form to complete which requires your name, address and telephone number (and that of your company if bidding on their behalf), together with the name, address and telephone number of your solicitors. You will be asked for some form of identification (e.g. driving licence) to confirm the accuracy of this information.
You will then be asked to provide the 10% deposit in the form previously described. If you are unable to do this the auctioneer does have the right to re-offer the lot and the vendor may claim from you any loss if the property subsequently sells for a lesser figure.
Once this initial paperwork has been completed and the deposit accepted, you will be given a “purchaser slip”.
In certain circumstances, but not all, the auctioneer may have the discretion to accept a personal cheque if no other acceptable form of payment is available. Please note that in such circumstances the cheque may reach your own bank as early as the following day, so you must ensure that you will by then have sufficient cleared funds in your account.
Each successful buyer will also be required to pay the auction house a Buyers Administration Fee of £895 (inc. VAT) on exchange of contracts for each lot purchased.
The auction clerk will then take your deposit and the information sheet to the contracts desk, usually located at the front of the auction room.
Next, you should go up to the contracts desk and hand over your “purchaser slip”. You will be asked to sign the auction Memorandum, which is printed in the back of each catalogue. In turn, you will be handed a similar document signed by the auctioneers on behalf of the vendor, which should be given to your own solicitor as soon as possible.
Unless it is stated otherwise, completion of the sale will normally take place 28 days later, when the balance of the purchase price will be due.
Remember that on the exchange of contracts you will become responsible for the insurance of the property so you must arrange for building insurance to commence immediately following the sale. You may do this by arrangement with the Building Society or Bank who have issued the mortgage offer or, Strettons Insurance department will have a desk at the Auction where you can arrange immediate cover at a very competitive rate.
What if the lot I want is unsold?
A small number of auction lots may fail to reach their reserves. If the lot in which you are interested should be one of these you should speak to one of the auction team before you leave the room as it may be possible to contact the vendor and negotiate an amended and mutually acceptable price.
A final word of caution
Provided that you have properly made all your enquiries and you have your offer of mortgage in place, buying property at auction need not be as unnerving as you may expect. If you are at all worried about this, our auction team is there to help you.
If however, you have any remaining doubts on the day of the auction then our advice must be not to bid.