Property auctions are a good alternative to estate agent-led transactions.
Indeed, they’re popular for sellers who can’t seem to get a good price or outcome for their property via more traditional means.
Banks and mortgage companies use residential and commercial property auctions to sell repossessed stock too. They’re also a good option for buyers looking for a great deal or a quick and easy purchase.
If you’re planning to buy or sell a property (or multiple properties) at auction, there are two main options you can choose from: online property auctions and in-person or “live” events.
But which is better for your needs and requirements? In this article, the auctions team at Property Solvers will explore this question.
How Does an Online Property Auction Work?
Buying auction property online is becoming steadily more and more popular. It fits in well with our modern lifestyle of working and shopping remotely.
If you choose to attend a property auction online, you’ll find that the majority of lots are available to bid on 24/7. In many cases, property in online auctions remains available for up to 28 days.
This means that pre-approved buyers have plenty of time to make a decision regarding each property during the bidding period. However, there is more time for bids to push the sale price upwards, sometimes far beyond the pre-determined guide and reserve auction prices.
There are also “live” property auctions online, with a countdown in place to show how long is left on each lot. The main principal is that buyers can bid for auction properties on their mobile device, tablet, laptop or desktop without having to attend an auction house directly.
Online property auctions are more likely to permit mortgage buyers. However, if you need to arrange finance to bid on a property, you must arrange that in advance. Check the small print on your mortgage in principle so that you are aware of any potential problems.
There are two main approaches to the sale of a property via online auction. The first is via the more traditional “unconditional” auction method. The second is via “conditional” auction.
In an unconditional auction, once a buyer has placed the highest bid and the auctioneer has announced that the lot is sold, the buyer and seller enter into a legally binding contract. The buyer must pay the deposit – usually 10% – then and there.
After this, the buyer must pay the remainder that is owed within a set time frame. This is usually 28 days from the date of the auction.
A conditional auction usually gives the buyer a period of around 40 days between the auction and the completion date. This consists of a 20 business day exclusivity period. Within this time, the buyer can arrange finance such as a mortgage. They may also engage and consult a specialist solicitor. The completion does not need to take place for another 20 days.
Much like a live auction, an online auction will require you to register and provide certain information before you can bid. You’ll usually need an official form of ID to help the auctioneer prevent fraud and identity theft.
You may also need to go through credit checks and money laundering inspections. Some auction houses will request proof of your access to finance – such as a “mortgage in principle” if you are not buying in cash immediately.
Finding Auction Property Online
While you can buy all kinds of property at an online auction, you’re more likely to find property in immediately “liveable” conditions this way. This makes mortgaging much easier. However, if you’re looking for a fixer-upper or a niche property – or if you want to buy a rental with tenants in situ – live auction is probably the better option.
You can check through the auction catalogue online well beforehand, where you’ll see images displayed of each upcoming lot. You’ll be able to find the auction dates for each property too.
You may even be able to access online “tours” of the available buildings. If you can, though, it’s always best to arrange an in-person viewing. The method to do so will vary between auctioneers. You may be able to sort out an independent visit, or you may need to sign up for an open-house style event, where you attend with multiple other potential bidders. You should arrange a survey too.
How to Bid on a Property Auction Online
So, now you’ll need to learn how to bid on a property auction online.
The method is very simple. Most online auctions simply ask you to register for an account with all required details (as mentioned above), then find the item in which you are interested by browsing the current listings. You should then enter your bids in the correct field and wait to see if you’ve won.
You can also arrange for “proxy” bidding, whereby the system will automatically enter bids for you in increments, up to a pre-programmed maximum amount. This means that you don’t need to interact with the system in person at the time of the auction itself. This is an ideal option for busy buyers.
There are many different approaches you can take when planning how to win an online property auction. The basics are much the same online as they are in the property room of a live auction. Simply stick to a tight budget and don’t get carried away by a sense of competition, and you’ll achieve a deal that works for you.
How Does a Live Property Auction Work?
If you’d prefer to bid on items at a property auction live and in person, there are still a great many auction houses at which you can do so. These are often called ‘in the room’ property auctions.
There is usually a far smaller window of time in which you may place your bid. Each lot is usually only available for bidding for between one and seven minutes – and unconditional auctions are much more common in person.
As with an online auction, you will enter into a legally binding contract as soon as you’ve placed the winning bid and the auctioneer has announced the lot is sold. To this end, you’ll need to have your finances and legal resources in order before you attend. You’ll need to have the funds available to pay the deposit on the day itself.
Bidding at a Live Property Auction
The traditional way of bidding at a property auction is to indicate using “paddles” or your hand to signal that you wish to make a particular offer. You’ll need to listen out for the amounts and be clear with your signalling to successfully place the right bids.
Many auction houses can arrange proxy bidding – but in a live context, this means you inform the auctioneer of your maximum threshold, and they bid on your behalf. You can also instruct a member of auction staff via telephone during the auction of your desired property. This is known as “telephone bidding”, and offers a remote option when bidding on live property auctions.
Finding the Right Property
As with online auctions, you’ll be able to browse the listings at an auction house online before you attend. You should arrange a viewing – and, ideally, a survey – of any property you are seriously considering.
Live auctions are more likely to feature repossessed properties, buildings in need of renovation or suitable for repurposing, or “niche” structures. As such, it may be harder to buy with a mortgage in these circumstances.
Which is Best?
Both online and live property auctions offer exciting opportunities for buyer and sellers. While an online auction is more flexible and accessible, a live auction is usually swifter and may offer a greater chance to save money.
If you’re looking for a property that is in an immediately “liveable” condition, you may prefer to attend online. If you want a project or an investment, a live auction may serve you better. Mortgage buyers may prefer bidding online, while in-person auctions are better suited to cash buyers.
In both cases, you’ll need to arrange your finances firmly beforehand, attend a viewing, get a survey and instruct an experienced auction conveyancer. They should look closely at the property’s “legal pack” to make sure everything is correct and nothing is omitted.
For further information about buying and selling any property, get in touch with the team at Property Solvers. We will be happy to assist you.