Top tips for buying and selling by auction
Whether you’re buying or selling a property by auction for the first time or the tenth time, our team at SDL Property Auctions aims to make the process fast and faff-free. It’s an important decision and one we do our best to make as straightforward as possible, from requesting a valuation or registering to bid right through to completion day.
Here, SDL Property Auctions managing director and auctioneer Andrew Parker shares his top tips for buying and selling at auction and shares his advice for making it a hassle-free process.
Buying in auction
1. Do your research
Firstly, if you’re looking to buy in an auction you need to do your research. Decide what you want to buy, why you want to buy, where you want to buy and what your budget will be. We sell both tenanted and vacant properties so a decision should be made whether you’re purchasing to live in, rent out or refurbish and sell on. You should look into the local amenities, where the high buy-to-let yields are and local past sold prices, for example.
To help your property search, register for our email alerts to review the auction catalogues as they’re released and use our online Property Finder to search for particular postcode areas or property types.
2. View the property
Like with a purchase through an estate agent, you can view properties being sold by auction prior to making an offer. Viewings are often group appointments and can be booked directly online. These viewings are an opportunity to look round the property but also ask any questions and check out the surrounding area and neighbourhood. Where we are selling a tenanted property or a piece of land its likely we may not be able to carry out a viewing and in these cases we will upload a virtual viewing where possible.
3. Read the legal pack
My top tip for buyers, over anything else, is to read the legal pack. With a sale by auction contracts are exchanged on the fall of the hammer so all due diligence and research must be done before bidding.
For all properties being sold by auction, the seller will create a legal pack which will detail things like rental agreements, searches, Land Registry documents and any fees associated with the sale. These are available to download for free prior to the auction and we highly recommend reading these and getting your solicitor to review them too.
4. Set your budget and arrange your finance
Bidding in an auction is exciting and it’s easy to get carried away in your determination to be the highest bidder. It’s important to set your budget before bidding and stick to it during the auction. If you’re buying to refurbish and rent out, you don’t want to be eating into your profit before you’ve found your tenants.
Plus, don’t forget you will exchange contracts immediately with completion usually taking place a month later. That means you can’t change your mind after the gavel has fallen and you must have your finance in place prior to bidding, as securing a mortgage or loan agreement within such a short timescale is unlikely. We work with financial companies who are used to funding auction purchases should you require any help getting your funds in place.
5. Don't leave it too late
If you’ve found your ideal property, you’ve viewed it, read the legal pack and got your finance in place then the next thing to do is register to bid. Our live streamed auctions are broadcast online and offer remote online, phone and proxy bidding, meaning you can watch the auction from the comfort of your own home, desk, garden and bid in the most appropriate way for you.
Registration closes at 5pm the day before the auction however I highly recommend doing this sooner rather than later as the process involves confirming your identity and providing your payment details. This means the exchange of contracts and paperwork can be immediately processed after the sale is agreed.
Selling by auction
1. Do some number crunching
There are a few different figures you need to agree when selling by auction, the most important of which is your reserve price. This is the minimum price you are happy to accept for your property – but isn’t necessarily the price that will be used to market the property.
For all properties sold in our auctions, one of our experienced valuers will carry out a free appraisal looking at the property type, location, condition and your selling circumstances and make recommendations on a guide price and reserve price.
- Your reserve price: is the minimum price you’re willing to accept for the property. This price is confidential between the seller and the auctioneer and ensures the property won’t be sold if this price isn’t reached.
- Your guide price: is the price we use to advertise the property and acts as a guide to prospective buyers about how much you’re willing to sell for. The guide price must be within 10% of the reserve price and is often where the auctioneer starts the bidding.
2. Decide on your auction sale method
We provide three types of auctions to offer choice for sellers in all circumstances. Our monthly live streamed Auction Events are broadcast online with real-time remote bidders, our daily online Timed Auctions operate on a countdown basis with a fixed timescale for bidding and our Buy it Now Auctions see properties offered for a fixed price, still under auction conditions.
3. Instruct your solicitor
One of the biggest benefits of auction is that the sale is secure on the fall of the hammer. To facilitate this all sellers must provide a legal pack for their property ahead of it being offered for sale. This is so the buyer can do their due diligence before bidding and avoids fall throughs post-auction. It’s therefore essential that you appoint your solicitor to create this pack as early as possible. We work with several trusted firms and can help you find a suitable solicitor who will help you compile a legal pack for the property.
4. No need to prepare
Unlike selling on the private treaty market, you don’t need to freshly brew a coffee or bake some bread before any viewings. And you don’t even need to give the rooms a lick of paint before we carry out our valuation.
Many auction buyers are searching for a property they can add value to and therefore could be actively looking for a refurbishment project, rather than a ready-to-move-into property.
5. Don't worry!
Selling by auction is a fast and faff-free process. Contracts are exchanged as soon as the hammer falls and completion is immediately set for usually a month later. The auctioneer will do all the marketing of the property, carry out the viewings on your behalf, manage any enquiries and manage the post-auction paperwork. All you need to do is instruct your auctioneer and solicitor, and then relax.
Buying and selling in a property auction…that was easy!
