GUIDE TO BUYING AT AN AUCTION EVENT
GUIDE TO BUYING AT AN AUCTION EVENT
It’s a common misconception buying a property at auction is only open to property developers or buy-to-let investors. More and more people are buying their family homes through auction and you don’t need to be a cash buyer!
There are three main benefits to buying a property through auction:
> SECURITY Once the auction finishes and you’re the successful buyer, there isn’t any risk of being gazumped, a chain collapsing or the seller changing their mind.
> SPEED At the end of the auction, at the fall of the gavel, contracts are exchanged between the highest bidder and the seller. Completion normally takes place 20 working days after the auction so you’ll get your keys in no time at all.
> TRANSPARENCY You can see who else is bidding. Unlike ‘best and final offers’, all bids are in the open and transparency can be assured throughout the auction.
If you’ve purchased a property before, chances are this was done by ‘private treaty’. This is the way most estate agents sell property and it’s where you view a property, make an offer and, once accepted, the solicitors will work on the details until you exchange contracts with the seller and get the keys a couple of weeks later. This can be a time-consuming process, often taking many months to finish. Buying at auction follows some familiar steps, but it is much quicker, transparent and far more secure.
All our auctions either take place at a convenient venue, outside normal office hours and if you’re not able to make the auction in person, there are options to either bid online, by telephone or by proxy. Some of our auctions are ‘live streamed’ meaning you can bid remotely, either online, by telephone or by proxy.
The main consideration with buying at auction is commitment. Once the gavel falls, if you’re the highest bidder, you’ve just exchanged contracts and are legally committed to complete the purchase. This isn’t an issue if you’re serious about buying the property and you can look forward to getting the keys a few weeks later.
This guide will go through some of the main parts of the process of buying a property through auction and we will always be on hand to answer any questions. You can reach us by emailing our auction team on: auction@ sheldonbosleyknight.co.uk
01789 867123 Stratford-upon-Avon office
0116 3087744 Leicester office
A WHISTLESTOP TOUR
OF THE AUCTION PROCESS
All our lots are available to view before the auction. After the viewing, if you are interested in the property, you can register to bid online. Here you will be able to download the legal pack (when available) which will detail the contract, searches, title and any information relevant to the property. It is advisable for your solicitor to review the legal pack and for you to take advice from them (in the same way you would if you were buying a property by private treaty).
On the night of the auction, if you haven’t already done so, you will need to register to bid. If you are bidding online, please ensure you log in with plenty of time to listen to the opening announcements at the start of the auction. If you are bidding by telephone, a member of the team will call you around half an hour before the start of the auction to establish communication with you. If you are bidding in the room, you place a bid by raising your bidding card and following the progress of the auction which will be controlled by the auctioneer. Provided the reserve price is met (see below for details on the reserve price), the auctioneer will exchange contracts at the fall of the gavel. The highest bidder will need to sign the memorandum of sale, pay their deposit and buyer’s premium and will normally have 20 working days to complete their purchase.
MORE DETAILS
The above summary will give you a flavour of buying a property by auction, and there is more information below on some key areas. If you have any questions about buying a property at auction, you can always email our auction team at auction@sheldonbosleyknight.co.uk or by calling 01789 867123 or 0116 3087744.
Definition of ‘Guide Price’ and ‘Reserve Price’
A guide price is an indication of the seller’s current minimum acceptable sale price. The guide price is given to assist potential bidders in deciding whether to pursue their interest in the property. It is usual a reserve price is set by the seller prior to the catalogue being printed. As the reserve price may not be fixed at this stage and can be adjusted by the seller at any time prior to auction, a guide price is published. This guide price can be shown as a range of prices where the reserve price will be set, or as a single figure where the reserve price will be within 10% of the guide price.
For example:
If the guide price is a single figure of £175,000, the reserve price will be between £157,500 and £192,500.
If the guide price is a range of between £150,000 and £170,000, the reserve price will be between £150,000 and £170,000.
Both the guide price and reserve price can change at any time before the auction. A reserve price is the minimum price at which the seller allows the auctioneers to sell the lot at and the reserve price remains confidential between the seller and the auctioneers.
Brochure and viewings
For each property, a brochure will be produced and made available online. It’s best practice for you to check the brochure when you view the property to make sure you’re happy with all the details. You will be able to arrange a viewing through the auction office by making an appointment at one of our block viewings. It’s important to check in the legal pack what fixtures and fittings are included in the sale, as this may differ with what you see during your viewing. Details of the viewing schedule will be on the property listing, on our website or by getting in touch with the auction team.
Date of auction
We hold regular auctions throughout the year and the dates will be published on our website and for each property listing. It will show the date, time and location of the auction. Full details of the venue can be found in the auction catalogue.
Legal pack and additional costs
The legal pack is available to review before the auction and it is essential bidders check the legal documents prior to bidding and take professional advice. Special conditions of sale can contain additional costs (that is costs over and above the price that the lot is ‘knocked down’ at) and bidders are deemed to be aware of any additional costs prior to bidding.
Buyer’s premium
A buyer’s premium applies to each lot. This is normally £1,500 inc VAT (£1,250 plus VAT) but may differ on certain lots as indicated in the auction catalogue. This is paid by the buyer in the saleroom immediately after the lot has been ‘knocked down’.
The auction catalogue
The auction catalogue is made available online as a PDF around one month before the date of the auction. During this time, the marketing material can change as new information is made available through the legal pack and the marketing updated. It is important to always review the latest version of the brochure on the website as this will be updated with the latest information. The final catalogue will be printed and made available on the night of the auction in hard copy and five days before the auction as a PDF online. On occasion, changes to the catalogue are necessary where information is made available after going to print. In these situations, amendments to the catalogue or conditions of sale (addendum) will be displayed in the saleroom and will be read by the auctioneer at the start of the auction. The addendum will form part of the contract of sale and the addendum sheet may have to be signed by the buyer. Bidders are deemed to be aware of any addendum and any other announcements made by the auctioneer and bid subject to these. It is important therefore to arrive at the saleroom before the start of the auction and read through any documents relevant to the lot you’re interested in.
Deposit
At auction, the fall of the gavel creates a binding contract and you will need to pay a deposit of 10% of the purchase price (subject to a minimum of £5,000). This deposit can be paid by debit card, banker’s draft or bank transfer using internet banking. Payments by personal cheque, credit card or cash cannot be accepted.
Rents, information regarding tenants and price estimates
Any estimates provided by the auctioneers regarding the price at which a property may be sold after redevelopment or rented cannot be accepted by a buyer as advice or any form of valuation.
Sale of property and completion
Unlike private treaty purchases, at the end of the auction, the successful buyer will have exchanged contracts at the fall of the gavel. This legally binding contract is due to be completed 20 working days after the auction date, unless specified otherwise in the special conditions section of the legal pack. This isn’t a problem if you are a serious buyer, as you can get the keys a lot quicker than through other methods of purchasing property.
Prior sales and withdrawn lots
There are occasions where lots are sold prior to the auction or need to be withdrawn from the auction at the last minute. It is important you check with the auction team prior to travelling to the venue to confirm the lot you’re intending to bid on is included in the order of sale for the auction.
Pre-auction offers
Some lots will consider offers before the auction takes place. Pre-auction offers must be submitted in writing to the auctioneer’s office by letter or email, including name, address, telephone number and details of conveyancers. Any pre-auction offer received is assumed to be a ‘best and final offer’ and no guarantee is given that there will be an opportunity to increase or review the offer should it not be accepted or should a better offer be received. Pre-auction offers can only be considered based on an exchange of contracts before the auction in accordance with the auction legal pack and the common auction conditions (found to the rear of the auction catalogue and the auction legal pack) with a 10% deposit (minimum £5,000) and payment of the buyer’s premium. If an offer is accepted, the lot will not be withdrawn from the auction until exchange of contracts has taken place.
Online, telephone and proxy bidding
We are pleased to be able to offer remote bidding to anyone who is unable to attend the venue. We once had a bidder who was midway to Australia when the auction was due to take place! Remote bidding can be done online, by telephone or proxy. All remote bidders will need to register to bid at least 24 hours before the auction is scheduled to start using the Auction Passport. Once your application has been received, we will need to complete antimoney laundering checks, verify your ID and approve your application to bid. You will not be able to bid until you receive an email from us confirming you are ‘approved to bid’.
Full information on bidding online, telephone or proxy, can be found on our website and within the auction catalogue.
Some of our auctions are live-streamed. This means there is no facility to bid in person and you can opt to bid either online, by telephone or by proxy.
IDENTIFICATION DOCUMENTS
When you register to bid, you will need to supply two forms of ID (one for ‘proof of person’ and should be a photographic ID and the other for a ‘proof of address’ and should show your current address on an approved document within the last three months). Once you have completed your bidder registration online, you’re pre-authorised to bid on the night of the auction. When you arrive at our venue, you will need to confirm your identity so we can cross reference with our pre-registered bidders.
If you are bidding online, by telephone or proxy, you will need to provide two forms of identification to the auctioneer at least 24 hours before the auction through the Auction Passport. If you are bidding on behalf of your partner, family member, a company or someone else or bidding as a non-UK citizen please read the information below for further advice.
Buying in your sole name
You will need to provide two forms of original identification for yourself, one showing proof of person and the second showing proof of address. Full information on identification requirements can be found in our auction catalogue.
Buying in joint names
You will need to provide two forms of original identification for both parties, one showing proof of person, and the second showing proof of address. They must be detailed on the registration form prior to bidding for them to be included on the memorandum of sale and contract as it cannot be amended afterwards.
On behalf of your partner, family member or third party
If you are bidding on behalf of someone else you will need to provide two forms of original identification, one showing proof of person, and the second showing proof of address for yourself and for each person who wishes to purchase the property. You also need to provide a letter of authorisation, signed by each person, authorising you to bid on their behalf. As the bidder, you take full responsibility and if you don’t provide all the necessary documentation, the property will go in your sole name and you will be legally obliged to complete the purchase.
Funds being provided by a third party (not including a bank or financial institution)
If your funds are being provided by a third party such as a relative or friend, you will need to provide two forms of original identification, one showing proof of person and the second showing proof of address for each party.
On behalf of a company
You can bid on behalf of a company if you are one of the shareholders and have more than 25% share capital. You will need to provide the certificate of incorporation, company registration number, personal details, two forms of original identification, one showing proof of person, and the second showing proof of address for all shareholders owning 25% or more share capital. If you are not a shareholder listed on Companies House, you will also require a letter of authority signed by the majority shareholder(s) granting you permission to bid.
Non UK citizen/resident
You can still buy a property at auction if you are a non-UK citizen or resident. Wherever possible, you should use funds from a UK bank account (you will need to provide a recent bank statement as proof) and appoint a UK solicitor who will need to email us at auction@ sheldonbosleyknight.co.uk to confirm they have been appointed to act on your behalf. You must also provide two forms of identification (which must be certified as a true copy by a bank, solicitor or governing body in our own country), passport number for yourself and each party wishing to be named. You will need to transfer 10% of your maximum bid (subject to a minimum of £5,000) and buyer’s premium of £1,500 inc VAT (£1,250 plus VAT) which must clear in our account prior to the auction sale. This will be refunded if you are unsuccessful which can take up to 10 working days. If you don’t have a UK bank account, please contact our team on 01789 867123 or 0116 3087744 to discuss your individual circumstances.
For more information and future auction dates please visit our website or our social media channels
www.sheldonbosleyknight.co.uk