Choosing to sell or buy property through an auction house has both disadvantages and advantages. Some of these are the same for both buyer and seller, while others differ depending on your part in the transaction. As the would-be seller or buyer, only you can identify the pertinent pros and cons, and decide whether one outweighs the other.
Buying at auction: pros and cons
Auctions often attract so-called "problem properties", such as those in need of renovation, with sitting tenants, or in less desirable areas. These homes may provoke less interest among buyers, may be difficult to mortgage and may not always fulfil sellers' sold property prices expectations.
Quicker process, with sales frequently taking less than a month to complete.
More transparent buying process, with no risk of rival purchasers being asked to submit secret offers in an attempt to drive up the selling price.
Sold property prices that are typically lower than the average achieved through an estate agent.
Tips for successful selling and bidding
If you do decide that an auction house is the route for you, have a look at the following tips collated from advice given by the auction houses themselves.
1. Before turning up ready to bid, make sure you've visited at least one auction beforehand. Auctions can be frenetic and sometimes confusing. They are definitely not for everyone - but forewarned is forearmed.
2. Order the catalogue for any auctions that you're interested in attending. Some auction houses make their catalogues available online, so don't forget to check for updates and late additions.
3. Don't buy blind. It's possible to view auction properties before the sale, either individually or as part of a group viewing. Make sure you take up the opportunity.
4. Get a survey done on any property you're seriously interested in. Once you've made the winning bid, you're committed to the purchase and it's too late to renegotiate the price.
5. Make sure your finances are in order. Successful bidders must pay 10 per cent of the sale price on the day of the auction and must usually pay the balance within 28 days. If it isn't possible to organise a mortgage in time to bid on a particular property that you're interested in, it may be possible to arrange a bridging loan. However, bear in mind that this is an expensive option, especially if your mortgage is not ultimately approved. Unless the property is particularly special, it may be prudent to hold fire and wait for a later auction.
6. Prior to the auction, appoint a conveyancing specialist with experience in property auction purchases.
7. Don't be fooled by the guide price. Properties often go for 10 per cent or more than the guide price, which is often set deliberately low in order to entice bidders.
8. Know your limit before you bid. Don't be tempted to exceed it, no matter how heated the competition.
9. Remember to take appropriate photo ID, proof of address and mortgage paperwork to the auction.
10. Have a buildings insurance policy lined up. If your bid is successful, you are that property's legal owner from the moment the auctioneer's hammer goes down, and so have responsibility for insuring it.
Auction houses
Auction houses operate across the United Kingdom. Many have national reach, but some specialise in a smaller area. Most also operate as an important know-how repository for those contemplating putting a property into auction or buying one.
1. Allsop
A national property consultancy that markets itself as the UK's number 1 property auction house, Allsop believes that sensible pricing and hard work are the two key elements to a successful residential property auction. Its first auction catalogue of 2019 featured more than 290 separate lots, ranging from properties listed without a reserve to those with one that exceeded £4.75 million. On the day of the auction, 208 of the 290 lots were sold. The first, a one bedroom flat, achieved £110,000 more than its £150,000 guide price.
2. Auction House
Another nationally-focused property auction house, with auction rooms across England, Scotland and Wales. Their website includes useful FAQs, aimed particularly at first time sellers and buyers, answering questions such as "is it possible to make an accidental bid?" and "what happens to unsold lots?"
3. Barnard Marcus
This London-based auction house has more than 35 years' experience in the industry. A subsidiary of the Skipton Building Society, it has around 600 offices nationwide, and boasts a 71.1% success rate which, last year, translated into selling 1,412 lots out of a total of 1,986.
4. Barnett Ross
Based in north London, this property auctioneer company currently holds five auctions per year and specialises in selling properties in need of renovation. Its sales include a block of flats in Finchley, which achieved £20,425,000 in 2018 and which still holds the record for the highest value property lot sold at a UK auction.
5. Brown & Co: East Anglia and Midlands auctioneers
Originally a rural property specialist, Brown & Co still retains a strong interest in selling countryside homes, but has now widened its reach to include the full range of residential and commercial properties. The company has a network of offices across the Midlands, the Yorkshire & Humber region and East Anglia, as well as a growing international operation.
6. Countrywide
Operating across the UK, Countrywide sells an annual average of almost £100 million-worth of residential and commercial property. It currently holds 24 auctions per year at 4 venues in North West England, Yorkshire, South Wales, and Devon / Cornwall.
7.Phillip Arnold Auctions
A potential choice for those looking to sell or buy small houses or low-cost flats, particularly within the west London suburbs or surrounding commuter districts, Phillip Arnold Auctions has been operating since 2007. Auctions are usually held in Ealing.
8. Fox and Sons
Operating on the south coast of England, Fox and Sons has a network of offices throughout Cornwall, Dorset, Devon, East and West Sussex, Hampshire, Somerset, Wiltshire and the Isle of Wight. Its website includes the facility to watch auctions live online.
9. Savills
An auction house that specialises in high-end properties in London and Nottingham.
10. Seel & Co
A South Wales auction house that claims to have an 83 per cent average sales conversion rate over the past two years. Since its inception in 2000, it has sold almost one quarter of a billion pounds worth of property. It also achieved the highest auction price sale in Wales when it sold a home with a £595,000 guide price for £1.6 million.
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