Introduction to buying at auction
There are many reasons for buying at auction, you may want to move quickly or could be looking for a plot of land to build on, you may want something really unusual that is not normally sold through an estate agent or quite simply want a quick and definite purchase.
Many buy-to-let investors buy at auction as a catalogue full of properties give them lots of opportunities to choose from.
Whatever your circumstances, the key to success is preparation.
STEP 1: Set your budget
Properties will be advertised with a guide price, which is based on the seller’s likely reserve price. The guide price has to be within 10% above or below the reserve price when a single figure is stated. If the guide price is a bracket figure the reserve price cannot exceed the top end of the bracket price. The property cannot be sold for less than the reserve price. The reserve price will be confidential between the seller and the auctioneer.
All purchases are subject to additional non-optional fees, including the buyer’s administration fee or reservation fee (whichever is applicable). Any further additional fees will be confirmed in the special conditions that are attached to the contract (in the legal pack). Therefore all prospective purchasers must inspect the legal packs and we strongly advise that all prospective purchasers request a legal representative to go through the pack for every lot that you may wish to bid on, in order to be made fully aware of any additional costs, if applicable. To find out more about any additional fees associated with a particular property please contact the auction office.
STEP 2: Do your research
There are lots of places you can start looking; auction catalogues, Rightmove, property supplements, social media, regional and local papers and by contacting us directly. It’s worth keeping an eye on our website as it is updated daily with new properties.
The quickest way to see our auction catalogue is to subscribe to the emailing list, this way it will be emailed to you the day it is launched. You will be the first to see it and it will give you plenty of time to complete your enquiries before the auction.
STEP 3: Your methods of sale
SDL Auctions offers three methods of sale:
- Unconditional (U) (also known as the traditional method) – contracts are exchange on the fall of the hammer and a 10% deposit is payable, as well as a buyer’s administration fee.
- Unconditional with reservation fee (UR) – contracts are exchanged on the fall of the hammer and a 5% deposit is payable, as well as a reservation fee of 4.8% in VAT or 3.5% inc VAT in London.
- Conditional with reservation fee (CR) – on the fall of the hammer the highest bidder will enter into a reservation agreement with the seller and will have 28 days within which to exchange. A reservation fee of 4.8% inc VAT or 3.5% inc VAT in London will be payable.
All deposits are subject to a minimum fee of £5,000. Deposits form part of the purchase price. All reservation fees are subject to a minimum fee of £6,000 including VAT. Reservation fees do not form part of the purchase price. Please note ALL fees and deposits are non-refundable.
Each lot will state which method of sale is being used, either online or by the following symbols in the catalogue: U / UR / CR.
STEP 4: Your ways to bid – in-room or online
Lots can be entered into an in-room auction – which will have a set time, date and venue and will be sold along with other lots. The auction room can hold hundreds of bidders which offers an opportunity for achieving the best price through competitive bidding.
The lots for our in-room auctions will be advertised on our website and Rightmove initially and then the auction catalogue will be finalised approximately four weeks prior to the auction. They will also be advertised in property supplements, on social media, regional and local papers and magazines. Many of the properties will also have an auction ‘for sale’ board outside.
Lots can also be entered into an online auction which take place regularly, with many auctions ending each day.
The properties will be advertised on our website prior to the auction starting as ‘coming soon’ lots, once the legal pack has been finalised the property will become live. The auction will usually be live for 21 days.
The online auction properties are advertised on our website, Rightmove, by the partner agents (if applicable) and on social media.
STEP 5: Preparing to buy in auction
Whether you’re buying online or in the auction room you will need to prepare for the auction. Here is a list of all the things you need to do beforehand:
- View the property before the auction. Viewing times are normally published online. If they’re not, contact the relevant office and they’ll be able to organise a viewing for you.
- If necessary, arrange for a surveyor to have a look at the property.
- Read the legal documents, which will be uploaded to our website. The legal documents are usually available at least seven days before the auction for in-room auction properties and immediately for online lots. It is wise for your solicitor to look through these before you bid on a property.
- Make sure you have your finance in place, for the deposit, any associated fees and the final balance. We work closely with Together, who have been applying common sense to lending for over 40 years. With same day “in-principle” decisions, find out how they could help you. Get in touch today.
- Before travelling to the auction room, contact the auction office just to make sure the property is still available.
- It’s also a good idea to arrange your buildings insurance policy to start once the hammer falls (not necessary for properties being sold conditionally). For some leasehold properties this might not be necessary, your solicitor will advise you on this.
STEP 6: Offers prior to auction
You can submit an offer before the auction, which if suitable, is forwarded to the seller. All offers must be received in writing and must be above the guide price. If the offer is accepted, your purchase will go ahead under auction conditions and when contracts have exchanged, the property will be withdrawn from the auction. The property remains fully available and open to other offers until contracts have exchanged.
Please note that some sellers may not want to consider any pre-auction offers. We will be able to inform you if that is the case.
STEP 7: Bidder registration
You will need to register to bid on any auction property.
Online auction registration
If you are bidding on an online auction property you must first, find the lot on our website and click on the link to create an account.
This is a very quick and simple process. In order to bid, you will need to be authorised for money laundering purposes, this will be carried out at the registration stage. This check will leave a soft footprint on your credit report (but it should not affect your credit rating). The registration process also requires card details to be entered, however the card will not be processed unless you are the successful bidder.
Once you have registered, you will be able to search, download legal documents and arrange viewings.
In-room auction registration
You will need to register on arrival. The registration desk is open an hour before the auction starts and throughout the auction.
Registration only takes a couple of minutes; there is a form to fill in, we will check your ID and give you a bidding number. The registration form can also be found at the front of the catalogue, so you can fill it in and bring it with you if you want to save a bit of time.
You will need to bring two forms of original ID, photographic proof and separate proof of address. If you are bidding on behalf of a company you will need to bring the certificate of incorporation, a list of directors and a letter of authority on company letterhead signed by a company director prior to signing the contract. If you already have your solicitors in place then bring their details with you.
Please note that you will have to register for each auction you attend so we can check your current identification and provide you with a new bidding number.
You can register for a membership card that will store your details so you don’t need to fill out a registration form each time, however you will still need to bring your original ID with you. The membership card can be used at any of our auction venues.
STEP 8: It’s time to bid
You can bid at any time prior to the auction end time. It may even be possible to make a bid prior to the auction starting, if you contact the auction office they will be able to advise you whether this is the case. You can also register to ‘watch’ an auction where you will get notifications on the property.
If you have placed a bid on a property, you’ll be notified via email if you have been outbid and you’ll have the opportunity to make another bid.
If the property fails to meet the reserve price and is unsold, contact the auctions team and at this point you’ll be able to make an offer which will be referred to the sellers for their consideration.
Before bidding begins the auctioneer will check that everybody has a copy of the addendum or late announcement sheet and will read out any last minute alterations to the catalogue details. When the property you are interested in comes up, makes sure you know the maximum price you can afford to pay – it’s easy to get carried away.
Once bidding begins, potential buyers will be asked to make their bids clearly by raising their hand or their bidding card. And don’t worry, you can’t buy a property by scratching your head!
Once the final bid has been put forward the auctioneer will signal that it is about to be accepted by using a phrase along the lines of going once, going twice, third and last time, and then drop the hammer to close the sale.
If a property fails to reach the reserve price it will be withdrawn from the auction and the auctioneer will invite anyone still interested in buying to talk to us afterwards. Sales can still be made post-auction under auction conditions if a price is agreed with the seller.
STEP 9: What if I can’t attend?
If you are unavailable at the time the auction is scheduled to end it is possible to enter your maximum bid in advance. The bidding will still increase in the relevant increments (usually £1,000) up to your entered amount.
If you can’t attend the auction then you can arrange either a proxy, telephone or internet bid. There is a form to complete, which can be found in the back of the auction catalogue or our website.
We need the form back before the auction along with copies of your identification and debit card details or banker’s draft so we can process the relevant deposit, buyer’s administration fee or reservation fee if you are successful.
- Telephone bid – a member of staff will ring you on the auction day, just before the property is offered for sale. We will take your instructions and bid on your behalf.
- Internet bid – you log onto our online bidding website, watch the real-time video stream of the auction and follow the instructions online to bid.
- Proxy bid – you leave us with your maximum bid and the auctioneer or a member of staff will bid up to that amount for you on the day. The bids will still go up in increments; we won’t simply submit your maximum bid.
Please note: when you submit a proxy bid the auctioneer is immediately appointed as your agent, he/she has a legal obligation to act on your behalf and your bid will be kept confidential.
You can also send someone to bid on your behalf. They will need to bring your written consent to the auction, along with their own ID as well as copies of your ID (which we will need to electronically check if you’re successful). They must also be able to pay the deposit if they are successful.
However, we always advise that attending the auction is by far the best way to bid otherwise you will miss out on the exciting atmosphere in the room.
STEP 10: Congratulations! Your bid has been successful
The auctioneer is legally entitled to sign the contract or reservation agreement on your behalf, the paperwork will be completed and sent to your solicitor so the completion work can be carried out. If you are present in the auction room you can sign the contract or reservation agreement. The process varies slightly depending on the method of sale being offered:
If the reserve price is met when the auction timer ends online or the hammer falls in the room, contracts are exchanged. At this point you are legally obliged to buy the property for the full purchase price. You’ll be charged 10% deposit (subject to a minimum fee of £5,000), plus a buyer’s administration fee – unless stated otherwise in the auction catalogue or on the property details for online only lots. The deposit contributes towards the purchase price.
Unconditional with reservation fee
If the reserve price is met or exceeded when the auction timer ends online or the hammer falls in the room, the successful bidder will be charged a 5% deposit (subject to a minimum fee of £5,000) plus the reservation fee and contracts are exchanged. At this point, you will be legally obliged to buy the property for the full purchase price. The deposit contributes towards the purchase price.
Conditional with reservation fee
If you are the successful bidder at the end of the specified time period online or on the fall of the hammer in the auction room, you’ll enter into a reservation agreement with the seller and have 28 days within which to exchange. If you fail to do so, you may lose your reservation fee. During the 28 day reservation period, the seller is not able to accept other offers.
You will be exchanging contracts, or entering a reservation agreement on the fall of the hammer. Therefore you’ll be required to provide the relevant deposit, buyer’s administration fee or reservation fee on the fall of the hammer. This can be paid by banker’s draft or debit card. Certain lots may only accept a banker’s draft as a method of deposit, these lots will clearly state this in the auction catalogue.
STEP 11: Completion
Completion usually takes place 28 days after exchange, unless stated otherwise in the special conditions or contract. We will be notified by the seller’s solicitor once the sale has completed and you’ll then be able to collect the keys for the property.
STEP 12: How can we help?
As one of the largest property auction businesses in the UK, SDL Auctions offers over 1,500 lots for sale every year from investment residential properties and vacant houses to building plots, mixed use, commercial buildings and others.
If you’re interested in finding out more, why not sign up to our email alerts?
“You and your firm’s professional approach were outstanding and I was amazed at the amount of technology that you use on the day. The screens and bidding information are clearly a great benefit to everyone in the room. You have an excellent team, who all worked so very hard during the sale.”
“I’d like to take this opportunity to thank you for your excellent service and customer care; the prompt email replies and general help have been much appreciated. I would have no hesitation in buying property through you in the future.”
“I’m still on cloud nine and wanted to contact you properly to say thank you for all your help and support during the purchase. Your friendly, professional manner made a very stressful situation so much easier to cope with. Fingers crossed now for a smooth completion. Thank you again.”
For advice about buying at auction call our team on 0800 304 7879