When it comes to snapping up a bargain, property auctions can be a great option. But you need to know what you’re doing...
Property auctions can be a great place to bag a bargain - and they allow you to avoid going down the more traditional and drawn-out buying route.
But you need to go in with your eyes open, so we asked experts NAVA Propertymark to provide a list of the top things you might not know about buying at auction.
1. No backing out if you are the buyer
If you are the highest bidder at a property auction, you cannot change your mind after the hammer falls.
It’s not like an online auction site where there are few penalties from pulling out. Here you could face huge costs or even be taken to court.
2. Consumer Contracts Regulations do not apply
If you buy an item online, it falls under the Consumer Contracts Regulations and you can often return the item for a full refund under the Distance Selling Regulations.
However, at a property auction you should view the item in advance and choose whether to bid, as you won’t be protected by this law, even if you bid via live webcast.
3. Importance of reading the small print
Always check the terms and conditions of the auction house you use – this cannot be overemphasised. By entering a bid, you are agreeing to its terms.
4. Paying the deposit and fees on the day
You will be required to pay the deposit and any administration charges immediately - and the balance of the purchase price usually within 20 business days of the property auction.
Chattels sales (for example, leasehold) often have a Buyer’s Premium to pay over and above the hammer price and may be subject to VAT too.
5. Any sale must make the reserve price
Sellers at auction may set a reserve price with the auctioneer – a figure which the lot cannot be sold below.
If you’re bidding below this, you might think you’re netting a bargain, but the property will be withheld. However, guide prices will not be below a fixed reserve as that would be misleading to bidders.
6. The auction house should be regulated
It is important to choose a regulated auctioneer, such as a NAVA Propertymark Protected auctioneer.
This will guarantee that any monies you pay will be held in dedicated auction client accounts to protect both you and the seller alike.
You might also be interested in...
- Martin Roberts gives his three tips for buying property at auction
- Step-by-step guide to buying a property at auction