At Bird & Co, our expert team of solicitors can assist with both selling and buying properties at auction.
Opting to buy or sell property at auction is often quicker and more cost-effective than a traditional property transaction.
The process involves fewer parties, with contracts becoming binding as soon as bidding concludes.
Due to the fast pace of auction sales, thorough preparation and research is crucial before listing or bidding on a property.
We highly recommend seeking legal advice from experienced auction property solicitors before participating in a property auction.
Our property auction solicitors’ expertise
Our property auction team for London have expertise in a wide range of property transactions, including:
Buying at auction
- Reviewing a legal pack and due diligence
- Visiting the property and conducting surveys
- Paying funds and completion
Selling at auction
- Submitting a legal pack
- Exchange and completion
Our fees for property auctions
We offer a range of flexible fees for our property auction services in London. This includes fixed fees for straightforward work, so you will know how much you need to pay from the start. If additional fees are required to complete your transaction, your solicitor will let you know.
Property auction FAQs
Can you buy an auction property with a mortgage?
Yes, it is possible. The property must be mortgageable, which means it should be in good condition. Your financial adviser will then guide you to a lender capable of processing your application and providing a mortgage offer within the limited time frame before the auction.
It's crucial to have your mortgage arranged and the offer ready when bidding at the auction. If your bid is successful, you'll exchange contracts immediately, and having your funding secured ensures it's available for completion.
Alternatively, there is also the option of specialist auction finance. While it might be more expensive, it can be arranged swiftly to support your purchase while a mortgage is being finalised.
Thorough research is essential beforehand, and it's advised not to bid if your funds haven't been secured and their availability confirmed.
What's the difference between a guide price and a reserve price?
The guide price provides an estimate of the property's value and shapes the starting point for bidding as determined by the auctioneer. On the other hand, the "reserve price" is the minimum bid the seller is willing to consider. It could be up to 10% higher than the guide price or lower if the owner wants to sell the property quickly.
Even if a prospective buyer bids higher than others, their offer will not be accepted if it falls below the reserve price. The seller communicates the reserve price to the auctioneer, and this amount can be adjusted until the day of the auction.
How long does a property auction sale take?
While all transactions vary depending on the individual circumstances, selling a property at auction typically takes place within two months. The timeframe for most transactions is 6 to 10 weeks, providing sellers with a quick way to finalise a property transaction.
The process involves pre-auction marketing, followed by the auction event where bidding occurs. Once a bid is accepted, the buyer and seller enter a legally binding contract, and the buyer must pay a deposit. The completion of the sale, including full payment and transfer of ownership, usually happens within 28 days, ensuring a quicker transaction than traditional property sales.
How do I buy a property at auction?
The process of buying a property at auction differs slightly from a traditional property transaction conducted by an estate agent.
Firstly, the seller’s solicitors will put together a legal pack and submit it to the auction house.
Before the auction, the buyer will then conduct due diligence, and their solicitors will review the legal pack, including the completion date.
Property visits and surveys are recommended before the auction.
During the auction, bidding is signalled by raising your hand, when the property is sold the buyer and seller will enter into a contract.
The buyer must commit to the purchase and pay the deposit straight away. The standard deposit for auction property is 10% of the purchase price.
Once the auction has finished and the buyer and seller have exchanged contracts, the buyer will instruct their solicitor to transfer the funds to the seller’s solicitor on the completion date.
What is an auction legal pack?
A legal pack is the documentation prepared by the seller's solicitor. It is typically available for download online with the property details and in the auction room.
Key documents include the Official Copy of the Register of Title, Land Registry and Local Searches, Special Conditions of Sale, Property Information Form, Fixtures and Fittings Form, Management Information, Leases, Tenancy Agreements, and Planning Permission Documentation.
Prospective bidders and their solicitors are advised to review all of the documentation carefully. Crucial details, including the completion date, additional disbursements on completion, and overage clauses, are typically outlined in the Special Conditions of Sale section.
What are the typical auction fees for buying and selling?
Understanding auction fees is important, whether buying or selling. Sellers often incur entry/marketing fees for advertising, typically 2-5% of the property value, depending on factors like property type and marketing needs.
Auctioneers also charge sellers a commission fee (2-2.5%, plus VAT) for selling their property. However, sometimes buyers will pay a commission to the auction house as part of their administration fees.
More importantly, some property auctions will require the buyer to pay a premium (1-3.5%, plus VAT) when they purchase an asset. This is another administration cost that goes to the auctioneer, not the seller.
While sellers will have to pay costs, buyers should be aware of premiums and administration fees, ensuring they have enough funds to cover the costs of buying property at auction.
Can I change my mind after successfully bidding at auction?
Buying a property is rarely a risk-free process. However, when you purchase property through an estate agent there is generally more leeway if you wish to pull out of the transaction. This is not the case with property auctions.
Withdrawing from a property transaction after an auction often results in significant penalties as it constitutes a breach of contract. The buyer will lose their deposit which is typically 10% of the purchase price. They may also have to pay extra costs, including the seller's fees and other associated penalties.