Best UK Property Auctions: A Guide to Buying Bargain Homes

Auctions for property in the UK have conventionally been one of the more popular manners through which investors, developers, and even first-time buyers get to obtain properties at a hopefully much lower price. The upside of buying at auction comes with a reward; it opens a window of opportunity for the acquisition of properties that are often unique or bargains not available on the open market. However, this process can be complex and fraught with risks if one is ill-informed. The guide will seek to outline how the UK property auction process works, how one can find auction properties, what to expect on the day of the auction, and lastly, some tips to ensure that a purchase goes through successfully. 

How Does the UK Property Auction Process Work?

What is a Property Auction?

In particular, an auction is a public sale in which properties are sold to the highest bidder.

Compared with more traditional methods of selling property, auctions are typically fast-moving and demand rapid action on the part of the buyer. Property sold at an auction can range from residential homes to commercial buildings, land or development sites. These can be listed for various reasons such as probate sales, repossessions, or those that have failed to sell on the open market.  

Types of Property Auctions

Property auctions in the UK have broadly been segregated into two categories:

• Traditional or In-room Auction: It is a type of auction that takes place in an auction room where bidders could attend in person, or they might be bidding through telephone or online services. Each property will be presented by the auctioneer and will be bid openly upon till the highest bid for a particular property is obtained.
• Modern Method of Auctioning: this is the most convenient way of purchasing property. Properties are listed on a website for a given time in this method, and any interested buyer will bid online on the website. The highest bidder at the close of the auction period takes the property. Online auctions may give more time to bidders than the fast action seen in traditional auctions.

How to Find Auction Property

Websites you can find auction places

• Auction House UK: One of the largest property auction companies in the UK, offering residential and commercial properties across the country. https://www.auctionhouse.co.uk/ 
• Savills Auctions: A well-known estate agent with a dedicated auction service for properties across the UK. https://auctions.savills.co.uk/ 
• Allsop: Specialises in residential and commercial property auctions, with regular sales throughout the year. https://www.allsop.co.uk/ 
• Barnard Marcus Auctions: Offers property auctions across the UK, including residential, commercial, and land. https://www.barnardmarcusauctions.co.uk/ 
• BidX1: An online platform where you can participate in property auctions from anywhere in the UK. https://bidx1.com/en 
• iamsold: Provides auction services in partnership with estate agents across the UK, offering a mix of traditional and modern auction methods. https://www.iamsold.co.uk/ 

These sites should help you explore various auction properties throughout the UK.

Where to Find It

 The locations of properties for auction require research and a need to know where to find the right resources. Some great places to start your search include the following:

• Auction Houses: Different auction houses are working in the UK by listing the properties for sale in their catalogues. Some of the well-known auction houses are Savills, Allsop and Barnard Marcus. They offer catalogues which include all the properties to be auctioned and those can be available on the internet or simply by visiting their offices.
• Portfolio of Properties: Rightmove and Zoopla both have a portfolio of properties up for auction, which makes for easier searching and comparing.
• Local Councils Websites: Quite a lot of local councils place surplus properties in an auction. These can be anything from the tiniest plot of land to residential houses. Investigating your local council’s website may therefore present some interesting findings.
• Auction Alerts: You will be able to register with a variety of auction houses or property portals for auction alerts, as a means to keep you informed about new listings that match your criteria.

 What to Look for in Auction Listings

When browsing through the listings of auctions, look out for the following attributes:

• Guide Price: Some form of an indication as to what the property may go for, yet not the definite price. Most properties sell either above or below the guide price, based on demand.
• Property Condition: Most properties sold at auction are sold “as-is,” so you’ll really have to be keen in your assessment of condition. Look for any kind of mentions for needed repairs or refurbishment on the listing.
• Legal Pack: In addition, the legal pack covers the required documents comprising the title deeds, local authority searches as well as the conditions of sale. It is always nice to go through in detail the legal pack with or without the assistance of a solicitor prior to auction.

Preparing for the Auction

Property Viewing

Whatever the case, it is always prudent to contemplate viewing the property in person before placing a bid. 

A view gives you a deep feeling of the physical appearance of the house and gives an idea of how much renovation work is to be done. To most auction houses, there are special days set aside for viewing, which one has to attend in order to have a personal view of the state of property if it meets one’s needs. 

Carrying out Due Diligence

The major events involved in the process are due diligence. Due diligence will include:

• Survey: If possible, instruct a surveyor to check over the property and compile a report on its condition. This can reveal any structural issues or hidden defects that could have an effect on the value of the property or on your desire to bid.
• Legal Review: This is where you let a solicitor go through the legal pack with a critical view, just in case there may be any legal issues-such as boundary disputes, restrictive covenants, or outstanding charges-that may affect your purchase.
• Finance: Secure your finance before attending the auction. Most auctions request a 10 percent deposit on the day, and the balance within 28 days. If using a mortgage, have a mortgage in principle and in writing confirm your lender’s willingness to provide the finance against the auction purchase.

Setting a Budget

It is very important to note that one has come with an estimated budget about what to spend in the auction and ensure that one abides by it. Bear in mind that other costs also come in, including:

• Auction Fees: These include the buyer’s premium that is a percentage against the cost of buying paid to the auction house plus all those administration fees.

• Stamp Duty: Don’t forget to work out how much SDLT you’ll pay based on the final price you pay for the property.
• Renovation Costs: If the property needs work, estimate the cost of renovations and factor this into your overall budget.

 The Day of the Auction

 Strategies

Auction day may be exciting but somewhat nervous for you. Here are some strategies you may consider:

• Start Low, Stay Cool: Starting low, one has the opportunity and scope for increasing the bid when required. There, you must not get into the excitement; you need to stay cool.
• Don’t Overstep the Budget: The excitement may soon get hold of you, but overstepping on your budget might eventually drive you to financial stress. Stay within the maximum you have set.
• Observe Other Bidders: Pay attention to what other bidders are doing. If you have the feeling that the bidding is slowing down, you could very well already be at a price close to where the property will eventually go for.

If you have been successful in your bid, then you should do the following:

• Pay the Deposit: Immediately on winning the auction, you will be called upon to pay a deposit of 10%. Ensure the funds are available either in cash or via bank transfer.
• Sign the Contract: Later, you will have to sign a contract of sale, committing yourself to purchase. It is, therefore, a legally binding sale, and attempting to pull out may result in losing your deposit and possible action through the courts.
• Completion of the Purchase: You are required to pay the purchase balance within 28 days. You will legally own this after you have completed paying for it.

Post-Auction Considerations

Arranging Purchase Finance

If you don’t have your financing already secured before the auction, you’ll need to make arrangements as soon as possible. The normal mortgages take quite a time to come through, so bridging loans or auction finance may be an option available to you since those are for quick completions.

Renovating the Property

Many auction properties do require renovation work of one sort or another. Whether that means a complete gutting or minor repairs, you’ll want to have a clear plan and budget for what you intend on doing. Finding the right contractor, securing any applicable permissions get the project through with as little hassle as possible.

Selling or Letting the Property

Once you have done this, you must decide whether to sell the property and realise your profit or let it to tenants. If you choose to let the property, consider the local rental market and let at a realistic rent. If selling, ensure that you market the property accordingly with the services of an estate agent.

Risks and Rewards of Buying at Auction

 Potential Rewards

• Bargain Prices: Perhaps the most obvious reason people go to a property auction is because they are looking to buy properties for bargain prices. As a matter of fact, if you are well-prepared and do your homework, then you just might be able to nail the property at a price much lower than its actual market value.
• Unique Properties: Many unique or unusually situated properties are sold at auctions that you simply could not have access to with a regular estate agent. It also includes development potential properties, which remain very lucrative opportunities for investors.
• Fast Transactions: The auction process is pretty fast. Completion usually is required within 28 days. This may be good for buyers who have to get the property rather urgently.

Possible Risks

• Lack of Time: The pace at which the auctions go is very fast, leaving very little time to do proper due diligence; this may bring some surprises or extra costs after the purchase.
• Blind Buying: Not viewing the property or sight of a legal pack may lead one to buy a property with serious problems.
• Financial risk: Financial risk involves forfeiting your deposit in case one does not close the purchase within the set period and can also be sued on breach of failure to get financing on time.

 Conclusion

Buying a property at an auction can be a really great experience in the UK, as one may come across unique and possibly undervalued opportunities. Yet, it is not without its risks, and success pretty much lies in thorough preparation and careful research. You can navigate an auction effectively by understanding the process, doing your homework, and having a specific budget. Whether you are an experienced investor or a first-time buyer, auctions are a vibrant and exhilarating way into the property market.

To take a closer look at the UK property auctions, you can search for properties online via such websites as Savills, Allsop, Barnard Marcus, Rightmove, or Zoopla. You never know-you might find that around the corner, your next investment property is up for sale if you go about it in the right manner.