Blog Post

Top Ten Tips for Buying a Property via Online Auction.

Publish Date: 04 July 2024

By Jade Shrubsole

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Further reading

Why is EIG a must-have tool for traders buying at auction?

The 'Guide Price' and the 'Reserve Price' are critical concepts to understand when buying at auction,

Top Ten Tips for Buying a Property via Online Auction.

Buying a property via an online auction can be a great way to secure a deal, but it also comes with its own set of challenges and risks. Here are some top tips to help you navigate the process successfully:

1. Research Thoroughly

• Property Information: Gather all available details about the property. This includes the legal pack, property description, photos, and any available inspection reports.
• Market Value: Compare similar properties in the area to ensure you're getting a fair deal. Use www.eigpropertyauctions.co.uk property history tools to gauge an accurate valuation.
• Auction Platform: Familiarise yourself with the auction platform. Understand the bidding process, registration requirements, and terms and conditions. (Insights Video available from Auction Room Event via EIG) can you put a link here.
• Guide Price:  This is not the figure that the auctioneer expects the property to sell for, but merely an indication as to where the reserve is currently set.  The Guide and reserve can and do change throughout the marketing period. Do not rely on it as a valuation.

2. Legal Due Diligence

• Legal Pack: Obtain and review the legal pack provided by the seller. This should include the title deeds, local authority searches, any tenancy agreements, and any other pertinent documents.
• Solicitor Instruction: Have a solicitor review the legal pack to identify any potential issues or restrictions that might affect the property. Ask for documents that should be in the legal pack and are not.  Be wary if they are not forthcoming.

3. Financing Preparation

• Pre-approval: Secure mortgage pre-approval if you need financing. Ensure your lender is aware that you are purchasing via auction. (Together Finance)
• Deposit: Be prepared to pay a non-refundable deposit, usually around 10% of the purchase price, immediately after winning the auction.
• There will normally be additional fees payable in the legal pack (Special Conditions of Sale), as well as the Buyer’s premium that many auctioneers charge the buyer. 

4. Property Inspection

• Viewings: Attend any available viewings or open house events. If this isn't possible, consider hiring a local surveyor to inspect the property on your behalf. Be very cautious about buying the property with out viewing it.
• Condition Assessment: Evaluate the condition of the property to estimate any potential repair or renovation costs.

5. Bidding Strategy

• Maximum Budget: Set a clear maximum budget and stick to it. Avoid getting caught up in the excitement of bidding wars.
• Proxy Bidding: Consider using proxy bidding services if you are unable to attend the auction in real-time. These services can bid on your behalf up to your pre-set limit.
• Incremental Bids: Be strategic with your bid increments.

6. Understand Auction Fees

• Buyer’s Premium: Be aware of any buyer’s premium fees that may be added to the final bid price.
• Other Costs: Consider additional costs such as administrative fees, legal fees, and any potential costs for surveys or inspections.

7. Post-Auction Process

• Immediate Payment: Be prepared to make the initial deposit immediately if you win the auction. Have funds readily available.
• Completion Timeline: Understand the timeline for completing the purchase. Typically, this is within 28 days of the auction, but it can vary.

8. Risk Management

• Contingency Plan: Have a backup plan in case there are issues with financing or unexpected legal complications.
• Insurance: Arrange for property insurance to be effective from the date of exchange of contracts.

9. Monitor the Market

• Trends: Keep an eye on market trends and upcoming auction listings. This will help you spot good deals and make informed decisions.

10. Stay Informed

• Updates: Stay informed about any updates or changes to the auction details, legals or property information.
• Professional Advice: Seek advice from real estate professionals, auctioneers, or other experienced buyers to improve your strategy and understanding of the process.

By following these tips, you can increase your chances of successfully purchasing a property through an online auction while minimising risks.