Our auction conveyancing solicitors provide everything you need to know about the technicalities and key considerations when purchasing an auction property.

Our auction conveyancing guide to purchasing a property at auction and how our quick and reliable specialist auction solicitors can help

Property auctions can be a great opportunity to get an otherwise expensive property at a bargain price. Sellers of auction properties are often eager to sell the property quickly and are thus willing to accept a much lower offer than the house’s value as the sale is confirmed instantly as soon as the bidder wins. However, it is essential to prepare before going to an auction to avoid making an expensive mistake. In an auction sale you generally only have 28 days to complete on the purchase. This emphasises your requirement for a fast conveyancing solicitor. Our fast conveyancing solicitors can complete your auction property purchase using our express service. We have streamlined our auction conveyancing process to provide swift turnaround times and complete works well within stipulated deadlines.

Why do sellers sell properties at auctions?

There are many reasons why a Seller may choose to sell their property at auction, particularly:

1. Speed – Contract papers are issued in advance of the Auction cutting out the entire process prior to exchange of contracts including raising enquiries, ordering searches and liaising with agents.
2. Guaranteed sale – The sale is binding at the fall of the hammer, meaning the buyer can’t “gazump” the seller (where the buyer withdraws their offer to make a lower bid)
3. Price – Opportunity to increase selling price in the event of multiple bids between competing buyers

What sort of properties are sold at auction?

While any property can be sold at an auction, sellers generally tend to sell their property at auction if there are issues which prevent it from selling through an estate agent, such as if it needs refurbishment or is difficult to get a mortgage for. If you’re looking to buy a home from an auction, it is important to know why the seller is choosing not to sell it through an estate agent and be aware of how much it could cost to restore it. Mixed-use properties (for example flats above shops) or properties which are designed to be tenanted are also often sold at auction to attract investors.  

What is the process of buying at auction?

1. Prior to auction day particulars are given to the client – This is a comprehensive package of documentation relating to the property which include the search pack, protocol forms, title deeds and any leasehold management pack (if leasehold).
2. It is your responsibility to review the pack in detail and consider whether there are any financial or legal implications that could affect your proposed use and enjoyment of the property. When buying at auction, you do not have the opportunity to raise enquiries to the seller about the property so your investigation prior to entering the bid must be thorough.
3. Exchange takes place on a successful bid at auction and you will pay a deposit (usually 10%) on the day.
4. Both you and the Seller then proceed to instruct your solicitors to deal with the completion formalities and subsequent registration of your freehold and/or leasehold title.
5. Completion is generally 28 days from the day of the auction if it is not otherwise stated. As part of auction special conditions, the sellers are not obliged to respond to enquiries in respect of the property or legal pack unless these are procedural for the purposes of completion and registration.

As your solicitors we will:

• Collate documentation and prepare a comprehensive legal report summarising all of this information.
• Complete thorough checks on the title deeds and action any pre-registration requirements (e.g. notices to freeholder).
• Report and review any lender specific requirements (if you are taking a mortgage)
• Prepare a completion statement in readiness for completion detailing the balance of the purchase price payable to the Seller, legal fees, disbursements and any other charges payable under the contract.
• Deal with post completion formalities such as payment of SDLT, registration at HM Land Registry including dealing with any leasehold requirements (if applicable) such as service of notice to landlord/management company, registration of deeds of covenant or application to register membership with management companies.

How our Fast Conveyancing Solicitors can help you obtain a mortgage

When buying a property at auction the transaction must generally be completed 28 days from the day of the auction. This urgency to complete is met by our fast conveyancing solicitors who will work quickly and efficiently on your case. Our team have a vast amount of knowledge in this area and will use this to expedite your matter and speed up your auction conveyancing where possible.

What are the risks of buying a property at auction?

While a property auction can be an excellent way to get a desirable property at a competitive price, it can be risky – and not for the reasons you may expect. While it is true that many properties sold at auction have defects which drive the value down, in most cases the defects will be made completely clear before the auction so you will be able to set an appropriate budget. The main risk of going to a property auction is that you may end up being outbid or finding out the property has been sold before the auction. You may have already spent a lot of time and money completing surveys and hiring a auction conveyancing solicitor and then not have the opportunity to buy the property at all, which can be frustrating. For this reason, make sure you only begin investing your time and money into researching the property if you think you will most likely want it.

Do I need to have the money available before the auction?

Yes – you must have your finances prepared before you buy a house, as the sale is legally binding the moment you win the bid. You will be required to pay the 10% deposit on successful bid, as contracts are exchanged the point you make the winning bid. You will then have 28 days to complete the purchase, so you must make sure you have the money available in advance. In some instances, you may instead pay a non-refundable fee to reserve the property instead of a deposit. The fee will normally be a percentage of the property, similarly to the deposit paid in a traditional auction. You will then have a slightly longer period (56 days) to exchange contracts and complete the purchase, which gives you more time to organise your finances and obtain a mortgage (if not already done). Some properties sold at auctions are unmortgagable; so please ensure you make all necessary enquiries with your mortgage advisor before entering the bid.

How should I prepare before an auction?

Here are a few things you must ensure you do before you go to the auction:

1. Arrange a viewing
   Once you have found a property you are interested in, contact the auction house and arrange a viewing. You should try to raise any enquiries with the auctioneer during the viewing to see if they are able to provide you with any additional information not contained within the pack. If the property is listed as requiring refurbishment, it may be a good idea to take a construction expert or structural engineer with you who can tell you how much any necessary work is likely to cost.
2. Request the auction particulars
   These will contain a comprehensive pack of legal documentation about the property, including the title deeds, any conveyancing searches as well as any information relating to the lease (if the property is leasehold).
3. Consider whether you wish to instruct an auction conveyancing solicitor to go through the auction particulars
   The input of someone with legal expertise is of essential importance, as they will be able to identify potential problems much more easily than someone with less knowledge of what to look out for. Plus, a auction conveyancing solicitor can request any important searches on the property not already contained in the legal documents, which could help you settle on a reasonable amount to bid.
4. Settle on a budget
   At an auction, you are required to act quickly, and it can be easy to go over-budget in the heat of the moment. Settle on a maximum bid before the auction so that you aren’t tempted to spend more than you can afford.
5. Read the terms and conditions
   By agreeing to bid, you are agreeing to the terms and conditions of the auction house. These will also tell you what the procedure is for the sale and what you will need to pay on the day, so you know exactly what to expect.

Can I still bid if I can’t make it to the auction?

Depending on the auction house, you may be able to have someone attend the auction and bid for you or be able to bid remotely either over the phone or online. If you want someone to attend the auction and bid on your behalf, they must bring an authorisation letter from you, and 2 forms of ID for you and for themselves. You are advised to make sure you give clear instructions to anyone bidding on your behalf as any bid made will be legally binding on you. Alternatively, most auction houses offer telephone or online bidding for those who can’t attend the auction themselves. Check with the auction house to see what they can offer and whether they will need anything in advance from you before the auction. However, there is a risk when using the telephone to bid or bidding online that you may lose your connection and miss out on winning the bid.

Can I make an offer before the auction?

Sometimes, the seller may agree to an offer before the auction, so you may be able to procure the property without having to bid. However, the seller will prefer to wait and see if they can get a higher offer in most cases, and by making an offer in advance the seller will have a rough idea how much you’re willing to spend, which could negatively impact you should they receive other offers.

Buying an auction property with a bridging loan – Why do you need a bridging loan?

Bridging loans are useful because they can quickly secure a large amount of funds for someone in a time-sensitive situation. Bridging loans can give you the short-term flexibility and access to funds which is required in an auction transaction. Bridging loans are useful if you are buying a property that is arranged into converted self-contained units and you wish to split the title so that you can mortgage each flat. A bridging loan can give you the time and provide capital to facilitate any works that need to be carried out. To read more about the complexities of obtaining a bridging loan for your auction property read articles written by our bridging loan solicitors. 

• How does a bridging loan work? 
• What’s the cost of a bridging loan. Try our bridging loan calculator. 

Purchasing a property that has been or will be converted into flats

You may be purchasing a converted house that you wish to let out as separate units. Properties split into self-contained flats that aren’t registered, no planning permission are hard to mortgage. Lenders could potentially be reluctant to lend on properties that have been split into self-contained flats whereby leases have not been granted in advance. As a result of either of these situations, you may need to purchase the property with your cash savings and our solicitors and mortgage advisors can later assist you with converting the property into separate flats and dealing with the land registry title split to allow you to raise finance against the new leasehold titles, more of which you can read about in our previous blog The title split of your property and creating new leases. A common theme is a lack of understanding of the complex nature of SDLT and capital gains tax rules and benefits of claiming Multiple dwellings relief (MDR). You can read more about Multiple dwellings relief in our blog Flat conversion, Stamp Duty Land Tax (SDLT) and claiming Multiple Dwellings Relief (MDR).

What happens at the auction?

For a first-time bidder, going to a property auction may feel very intimidating. Here is a rough explanation of what to expect at the auction itself:

1. Calling in advance:
   As mentioned above, the seller may accept an offer made to them for their property before the auction begins. To make sure you don’t waste your time, it is wise to call them in advance to check that the auction for the property you want is still going ahead.
2. Arrival
   You should aim to arrive at the auction house early, as this will give you the chance to make any last-minute enquiries with the auctioneer and register your interest in the property with the seller. Any announcements, such as additional information regarding the property, will be made by the auctioneer before the bidding or will be made available in an Addendum – this information may affect your interest in the property so you need to make sure you’re there to hear it.
3. Bidding
   When it is time for your auction to begin, the auctioneer will announce the address of the property that the auction is for. There will be a guide price at which the bidding will start, and a reserve price which is a non-disclosed minimum price the seller can sell the property for – these are not always the same value. Once the reserve price has been reached, the seller must sell the property to whoever makes the highest bid from then on. Make sure you bid clearly – most auction houses will give you a paddle to raise or other mechanism to indicate that you are bidding.
4. Success
   If you win, you are bound by the terms and conditions of the sale the moment the bidding ends.
5. Completing the sale
   After the auction, you will have a short time period (generally 28 days) to complete the full payment for the property. This is why it is so important to make sure you have your finances prepared in advance, so that you do not default.

What happens if I win the bid but do not complete the sale?

If you fail to pay the full sum for the property before the deadline, you will default and lose your deposit and the admin fee. Additionally, the seller may be able to sue you for the money you owe them and any further losses. For this reason, do not bid more than you can afford to pay, and make sure the money is available in time.

How do I ensure my auction conveyancing completes within the given time frames?

As we previously mentioned, auction property purchases are often required to complete within 28 days. In order to stay within these time limits you will need a fast conveyancing solicitor to act on your behalf. Our fast Conveyancing solicitors can complete your auction property purchase using our express service. We do not compromise our service standards, rather we have streamlined our conveyancing process to provide swift turnaround times and complete works well within stipulated deadlines. To find out more about how we keep the conveyancing process fast, please read our blog titled Fast Conveyancing Solicitors.

Our brand new Conveyancing app

We at Starck Uberoi know that our clients lead busy lives. With so much to do, keeping track of your conveyancing transaction can be hard, and the idea of trawling through hundreds of emails is exhausting to even think about. So, we decided to create a way for our clients to access our online conveyancing solicitors at a time which is good for them while being able to check their case on the go. For information about our brand new online conveyancing app, please read our blog titled Online Conveyancing Solicitors.

How Starck Uberoi can help

At Starck Uberoi, our experienced conveyancing solicitors are aware of the importance of speed and precision when it comes to auction properties. By instructing us, you can rest assured you will have all the information you need in order to complete, and that the conveyancing transaction will be completed efficiently. For more information, please see the Property Solicitors page on our website. To book an appointment please call 020 8840 6640. Our offices are based in Brentford, Ealing, Chiswick, Canterbury and London Victoria. For an appointment at any of our offices, email us at solicitor@starckuberoi.co.uk or call 0208 840 6640.