Your Ideal Home, Your Winning Bid: A Buyer’s Guide To The UK Auction Market

Corridor with Decorative Interior in Apartment

Buying a property at auction can be an exciting and cost-effective way to purchase your dream home. With houses selling under the hammer in minutes, auctions offer motivated buyers the chance to snap up a bargain. However, navigating the world of property auctions requires careful preparation and planning. This comprehensive guide takes you through everything you need to know to successfully purchase your ideal home through a UK property auction.

Understanding UK Property Auctions

Property auctions in the UK follow a dynamic open-bidding format, with properties marketed for 3-8 weeks before going ‘under the hammer’. Auctions are an increasingly popular route to homeownership, with over £4 billion worth of residential property sold at auction across the UK in 2020.

What Types of Properties Go to Auction?

While auctions were traditionally associated with distressed sales, today all types of residential properties go under the hammer. The auction route provides an efficient sale method for:

  • Probate properties need to be sold to release funds from an estate
  • Ex-local authority or housing association stock
  • Properties requiring renovation or modernisation
  • Vendor repossessions
  • Surplus corporate properties, e.g. office buildings converted to apartments
  • Developers or investors liquidating portfolios

Auctions allow sellers to achieve a fair market price and certainty of sale. For buyers, auctions can mean less competition and the chance to acquire a property below market value.

Why Sell or Buy at Auction?

Benefits for sellers:

  • Certainty of Sale – the fall of the hammer exchanges contracts
  • Speed – properties can sell in just a few weeks
  • Reduced Costs – seller only pays auction fees, not full estate agent commission
  • Marketing Exposure – auctions attract motivated cash buyers

Benefits for buyers:

  • Purchase Property Faster – avoid drawn-out private sale negotiations
  • Less Competition – fewer bidders than conventional house hunting
  • Achieve Below-Market Price – capitalise on motivated sellers or properties needing work
  • Flexibility on Completion Date – agree timeline with seller post-auction
  • Reduced chain Issues – many auction properties are chain-free

How it Works

The typical auction property process:

  • Cataloguing – Property entered into auction catalogue by seller’s auctioneer
  • Marketing – Property marketed to registered auction buyers for 3-8 weeks
  • Viewing – Open viewings arranged for interested parties
  • Auction Day – Bidding auction commences, property sold to the highest bidder
  • Exchange – Buyer exchanges contracts and pays a deposit (10% of purchase price)
  • Completion – Balance of funds paid on completion date, keys released

Finding Your Ideal Auction Property

With so much choice, finding your perfect auction lot can be challenging. Here’s how to pinpoint possibilities and uncover auction gems:

Research Upcoming Auctions

  • Review Auction House Catalogues – View available lots online for major UK auctioneers (see list below). Sign up for email alerts.
  • Check Property Portals – Leading sites like Rightmove display auction listings from various auction houses. Use filters to hone your search.
  • Check Developers’ Websites – Housebuilders like Taylor Wimpey sell new properties via auction.
  • Monitor Trade Press – Publications like Property Investor Today detail major upcoming auction events.
  • Track ‘Auction Results’ – Seeing what has already sold gives insight into local auction market activity and price levels.

Define Your Property Wish List

Focus your auction search by outlining must-have features:

  • Location – Any areas you’re set on? Commutable to workplaces/schools?
  • Property Type – House, apartment, land, commercial premises?
  • Bedrooms – Need a certain number to accommodate your household?
  • Style – Period, traditional, contemporary, new-build?
  • Land – Garden size, off-street parking, garage?
  • Condition – Ready to occupy or needs updating/extending?
  • Facilities – Garden, parking, garage, countryside views?
  • Timeline – Date by when you need to complete the purchase.

Viewing Auction Lots

Arrange viewings for properties matching your wish list. Focus on:

  • Condition – Cosmetic finish, signs of dampness/subsidence, boiler functioning?
  • Renovations Needed – Upgrades for kitchen, electrics, plumbing etc.
  • Structural Integrity – Check walls, ceilings, roof, and windows intact.
  • Alteration Potential – Can the layout be changed, the loft converted, extension added?
  • Compliance – Have gas/electrical safety certificates been issued?
  • Energy Efficiency – Insulation, double glazing, eco heating system?

Viewings will help you accurately estimate required repairs and refurbishment costs.

Setting Your Budget

Assess how much you can afford to spend:

  • Mortgage – Get an Agreement in Principle confirming the amount you can borrow.
  • Deposit – Have at least 10% of the purchase price for the auction deposit.
  • Fees – Auction fees of £800-£1500. Stamp Duty, legal fees.
  • Renovation Costs – If extensive works are needed, are you able to finance these? Get quotes.
  • Maximum Bid – Factor in fees and works to set your ceiling bid price.

Preparing for Auction Day

Meticulous planning and preparation will give you the best chance of securing your ideal auction property.

Financing

With auction sales progressing rapidly, have your finances in order before bidding:

  • Mortgage Agreement in Principle – Approach lenders to confirm you can borrow the required amount. Having this in place shows vendors you can move quickly.
  • Deposit – Ensure 10% of the maximum bid price is available for exchange deposit. Deposit is payable on the fall of the hammer via banker’s draft, solicitor’s cheque or transfer.
  • Fees – Budget for non-refundable auction fees, legal fees, and stamp duty. Factor these into your maximum bid.
  • Survey – Consider having a survey conducted prior, so you are aware of potential issues.
  • Solicitors – Appoint a solicitor to handle legal formalities and searches. Inform them of the auction date.

Registration

You must register with the auction house to bid:

  • Proof of ID – Supply identity documents such as passport, driving licence, and utility bills.
  • Proof of Funds – Provide bank statements, Agreement in Principle, and deposit funds.
  • Auction Contract – Sign and return the auction contract agreeing to the conditions of sale.
  • Due Diligence – Review legal pack containing title deeds, leases, searches etc.
  • Bidding Options – Decide if bidding is in person, by telephone or by proxy. Register your method.

Viewings

Undertake thorough viewings of shortlisted properties:

  • Inspect Condition – Check for dampness, structural issues, and problems covered by furniture. Photograph everything.
  • Scope Renovations – Get quotes from builders for repairs or upgrades needed.
  • Ask Questions – If anything is unclear in the legal pack, seek clarification from the auctioneer.
  • Monitor Interest – Gauge level of viewings and bidders registering. This indicates possible competition.

Setting Your Limit

  • Research Sale Prices – Analyse prices of comparable local sale properties to gauge market value.
  • Decide Maximum Bid – Based on market value, projected renovation costs and maximum mortgage amount, establish your absolute highest bidding level. Stick to this discipline during the heat of the auction.
  • Opt-out Level – Have a drop-out price where if bidding reaches this point, you will withdraw. Factor in some margin for getting swept up in bidding.

Bidding at Auction

Auction day has arrived! Stay cool-headed for the intense bidding process:

Bidding Options

Decide your bidding method:

  • In-Room – Bid in person by attending the auction. Hold your bidding card or paddle up to bid.
  • Telephone – Bid remotely by advising the auctioneer of your number. They will call you when the lot comes up.
  • Proxy – Authorise the auctioneer to bid on your behalf up to a fixed amount.

Auction Proceedings

The auctioneer follows established protocol:

  • Lot Details – Property details are read out including features, location, and guide price.
  • Opening Bid – Auctioneer proposes an initial starting bid to launch bidding.
  • Reserve Price – The minimum price the seller is willing to accept, kept confidential.
  • Bid Increments – Bidding advances in set increments, typically £1,000 to £5,000.
  • Vendor Bids – The auctioneer may bid on the seller’s behalf up to the reserve price.
  • Referrals – Bids falling short of the reserve trigger discussions with the seller before the property reopens for bids.
  • Gavel Fall – When bidding ceases, the auctioneer bangs the gavel signifying the sale.

Bidding Tactics

Use savvy strategies to place winning bids:

  • Start Low – Opening your account with a low opening gambit establishes you in the bidding without overstepping.
  • Maximise Increments – Bid in lower increments to scrape ahead of competitors without overbidding.
  • Watch Body Language – Read bidder reactions around the room to gauge where competition is coming from.
  • Concede Small Rises – If bidding stagnates, concede measured bids to edge towards the reserve.
  • Stay Steadfast – Have courage in your convictions and maximum bid. Don’t get emotionally carried away and exceed your limit!

Exchange & Completion

With the gavel down, sale contracts are legally exchanged. Now:

  • Pay Deposit – 10% of the purchase price must be paid immediately, along with auction fees.
  • Sign Contract – The contract is legally binding once both parties sign.
  • Finalise Dates – The completion date is agreed between parties, typically 20-28 days post-auction.
  • Appoint Solicitors – If not already instructed, appoint solicitors to handle completion formalities.
  • Arrange Finance – If required, finalise the mortgage offer and ensure the full balance is available for completion.

Completing Your Purchase

With the auction over, focus on progressing smoothly through to completion.

Conveyancing

Your solicitor handles the legal aspects:

  • Searches – Checks local authority and water company databases for planning, roads and environmental issues.
  • Enquiries – Raises any outstanding queries on the property or title deeds with the seller’s solicitor.
  • Mortgage – If required, liaise with the lender to activate the mortgage offer.
  • Transfer Deed – Prepares property transfer deed and registers the sale with the Land Registry.
  • Completion – Conducts final funds transfer enabling release of keys.

Survey

If not already surveyed, you may opt to commission:

  • Valuation – Determines if property presents fair value for money.
  • HomeBuyer Report – More thorough inspection checking for potential faults.
  • Full structural Survey – Detailed analysis advising if major repairs are needed.

Insurance

Once contracts are exchanged, the property is legally yours. Take out insurance covering:

  • Buildings – Covers rebuild costs if the property is damaged.
  • Contents – Protects possessions inside property against loss or damage.
  • Life cover – Provides mortgage protection in case of death or illness.

Renovations

If extensive work is needed, commence planning:

  • Obtain Quotes – Get updated estimates from builders based on in-depth survey findings.
  • Apply for Permits – If alterations require consent e.g. extending, submit planning applications.
  • Schedule Contractors – Confirm availability of builders to start work soon after completion.
  • Order Materials – Purchase supplies like kitchens and bathrooms with long lead times.

Completion Day

This big day involves:

  • Final Payment – The balance of purchase funds must be paid by bank transfer.
  • Meter Readings – Note down utility meter readings on the day keys are collected.
  • Key Collection – Meet the seller’s solicitor to take possession of property keys!
  • Inventory – If the property is tenanted, conduct an inventory check with tenants in situ.
  • Celebrate – Crack open the bubbly to toast your successful auction purchase!

Flipping Auction Properties

For investment buyers, purchasing auction properties to refurbish and flip can be an astute and lucrative strategy. Here are top tips for successfully flipping UK auction properties for profit:

Acquiring Below Market Value

The auction environment allows below-market purchases, especially for properties requiring significant renovation that deter private buyers. Leverage this to acquire property assets with strong added value potential.

Research Local Market Rates

Analyse recent sale prices and current asking prices for comparable nearby properties to gauge realistic local market values. Target auction lots that can be acquired at least 15-20% under market rate.

Estimate Renovation Costs

Obtain builder quotes to accurately assess works required and costs for renovations like kitchens, bathrooms, and extensions. Build a 20% buffer into the budget for unexpected overruns.

Maximise Resale Appeal

For optimum resale gains, renovate to high standards using quality materials. Add value by increasing living space, improving layouts and enhancing kerb appeal.

Option of Sub-Dividing

Consider if larger properties could be converted into multiple dwellings, for example sub-dividing a house into flats. Additional units can significantly boost rental yields and end values.

Achieve Fast Turnaround

To realise rapid gains, complete renovations and get the flipped property back on the market within 6 months. Be responsive when liaising with contractors.

Market Optimally

Showcase refurbishments in listing photos and descriptions. Market to both homeowners and investors. Stage furniture to emphasise spaciousness and lifestyle potential.

Sell Via Auction or Private Treaty

Weigh up which sale method is likely to achieve the best price. Auctions provide speed and certainty of sale while private treaty allows more negotiation on price.

Following the above strategies will help you successfully buy, renovate, reposition and sell auction properties for strong profits.

Major UK Auction Houses

Over 75% of property auctions in the UK are handled by 25 leading auctioneer firms. Here are some of the biggest auction houses to watch across the UK:

Allsop

One of the largest independent property auctioneers in the UK. Allsop holds flagship London auctions at the Berkeley Hotel plus regional auctions across the UK.

Key facts:

  • 70,000+ properties valued since 1959
  • 8000+ lots auctioned annually
  • £5 billion worth of property sold

Barnard Marcus

Long-established auction house conducting high-profile London property auctions at the Barbican plus regional auctions in Essex, Kent and East Anglia.

Key facts:

  • Founded in 1998
  • 8000+ lots sold since inception
  • Annual sales of £560 million

Clive Emson

Leading regional auctioneer with offices across the South East. Clive Emson holds frequent London auctions at the Grand Connaught Rooms.

Key stats:

  • Hosts 65 auctions annually
  • 8000+ lots sold each year
  • Over £16 million in property sales per month

Savills

Prestigious global property sector brand offering dedicated UK auction services from regional hubs. Flagship auctions are held bimonthly at the Savills London head office.

Key facts:

  • £1 billion in UK auction sales
  • Sells 3000+ properties a year
  • Regional hubs across the UK

SDL Auctions

Dynamic auction arm of SDL Property Auctions, conducting auctions across the UK from bases in Scotland to the South West.

Key stats:

  • 70% success rate
  • £96 million annual sales
  • 1000+ lots auctioned per annum

Conclusion

Acquiring a property through houses for auction UK can be a strategic way to secure your forever home or investment gem at an advantageous price. However, comprehensive preparation is essential for success in this endeavour. Attending property viewings, making financial arrangements, setting your bidding limit, and bidding strategically all play a pivotal role in increasing your chances of acquiring your ideal property at auction.

It’s crucial to keep a level head on the big auction day and avoid letting emotions carry you away in the heat of bidding. With the UK auction sector currently booming, there’s no better time for buyers to tap into this vibrant market and unlock the door to their dream home or investment property.

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