Buying a house at auction | NatWest

 

 

 

Buying a house at auction

House auctions used to be associated with expensive real estate and houses in need of hefty renovations or restorative work, but that’s no longer always the case. With more and more buyers turning to property auctions to find their dream home, is it something to consider and what do you need to know if you decide to buy a house at auction?

Buying a house at auction

Row of houses

How do auctions work?

If you think buying for auction could work for you, the good news is there are fewer steps you’ll need to prepare for. Once you’ve decided on an area, it’s best to get in touch with the local auction houses, who will be able to send you a catalogue.

You’ll need to act quickly – there’s usually only a few weeks between the catalogue publication and the auction itself. In this time you might want to visit any shortlisted properties, carry out a survey on your favourite and get a second opinion on the guide price given in the auction catalogue. It’s also best to get an agreement in principle confirmed before the day of auction to prepare for the quick turnaround time.

If you’re new to auctions, it can be helpful to watch a few before you start your house search so you know what to expect.

 

Benefits of buying a house at auction

  • As well as avoiding the traditional house-buying process, which can be long-winded and at times uncertain, buying a house at auction could reduce the number of costs involved. There will still be costs such as an administration fee, but this can often be much less than any estate agent fees.
  • If you’re looking for a property that’s a little different, buying at auction can be a great way to find something special. You’ll usually find houses that estate agents are unable to sell – or wouldn’t typically sell – making it a great way to pick up a house whose potential may have been overlooked. 

Drawbacks of buying a house at auction

  • Even though you avoid the risk of being gazumped when you buy at an auction, choosing to buy a house this way carries its own risks. As soon as the hammer goes down, the sale is final. You’ll usually need to pay 10% on the day of the auction, and the remaining 90% soon after. You may want to consider having a mortgage agreed in principle before the auction; otherwise, you could lose the 10% along with the property.
  • If you decide to buy a house at auction, you’ll need to make sure you’ve spent time – and probably money – checking the property is up to scratch before the day of the auction. Naturally, this carries the risk of wasting both if the property gets sold before the auction or somebody outbids you on the day. 

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