The Auction Market Reality
Entrepreneurs may well be on high alert in the UK following the unprecedented events of 2020 and beyond. The market condition continues to shift — some see opportunity, others see uncertainty. The outcome depends on how a property entrepreneur interprets opportunity based on their personal situation and preparation.
Homes are not in short supply. There are vendors willing to sell below market value and others prepared to wait for higher offers. Desperate sellers often create motivated buyer situations — and motivated buyers are vulnerable to property pitfalls.
Auction Warning
Auction is not free from danger. Preparation must be intensive. A winning bid is a legal commitment.
Understanding Auction Bidding
At auction, buyers (bidders) are presented with a catalogue of properties. The catalogue gives general information — it is not guaranteed to be fully accurate or complete.
Serious bidders must download and carefully read the Legal Pack before auction day. This document contains binding legal information, property terms, and associated costs.
There are various bidding methods including live, online, phone and proxy bidding. Each auction house has different rules. Read their terms carefully before participating.
Preparing For Auction
Prime Life Enterprise Ltd suggests the following due diligence steps before participating in traditional or online auctions:
- Browse the catalogue carefully
- Read the legal pack in full
- Work out your finance accurately
- Get your deposit ready
- Choose a solicitor
- Get tax advice
- Have a mortgage broker
- Work out returns for your chosen strategy
- View the property
- Order a survey if required
- Research the local area
- Speak with local builders and obtain quotes
- Be confident with the area
- Read the full auction process
- Decide between personal or proxy bidding
- Have mortgage approval ready
- Arrive early on auction day
- Be familiar with procedures
- Have your I.D and legal documents ready
- Never exceed your bidding limit
- Do not become a motivated buyer
- Ensure your business partner is informed
- Understand auction rules — there is no going back
- Winning a bid is legally binding
- Prepare your action plan after winning
- Whatever else you need — prepare it
Legal Responsibility
The legal pack is called “legal” for a reason. Once a bidder wins — including online — they are bound by all terms of the vendor and auction house.
Ensure you understand all associated costs beyond the purchase price. Auction houses may include administration fees, buyer premiums, legal fees and other additional costs.
The auction house is simply another method of purchasing property. It is not automatically a below market value strategy. You may secure a bargain — or you may overbid.
Final Advice
Register early. Study the rules. Watch auctions before participating. Attend live auction houses if possible. The longer you prepare, the stronger your confidence and knowledge.
Preparing to Buy a Home Guide
Typical Checklist
- Choose a Trusted Solicitor
- Confirm Fees & Scope
- Provide ID & Financial Proof
- Review Property Details
- Commission Property Searches
- Examine Contract Pack
- Review Mortgage Offer
- Respond to Enquiries Raised
- Sign Contract & Pay Deposit
- Prepare for Completion
- Confirm Post-Completion Tasks
- Receive Keys & Move In
The Organised Steps to Buying a House
- Sort out your accounts: This could be your wage, self-employment proof of earning, or a business plan for B2L.
- Deposit: Save for the deposit.
- Register with estate agents (x3): Let them know you are ready to buy when you decide on the type of house.
- View at least 20 houses: Ensure it’s the house you really want.
- Provide ID & Financial Proof: Submit photo ID, proof of address, and confirm your source of funds for anti-money laundering compliance.
- Choose a Trusted Solicitor: Experienced in residential conveyancing with good reviews.
- Confirm Fees & Scope: Understand legal fees, disbursements, and included services.
- Review Property Details: Share full property details, estate agent info, and specific concerns (e.g., leasehold terms).
- Commission Property Searches: Local authority, drainage, environmental, and planning searches.
- Examine Contract Pack: Review seller’s paperwork with your solicitor and flag any issues.
- Review Mortgage Offer: Confirm alignment with transaction; solicitor checks with lender.
- Respond to Enquiries Raised: Provide clarity on any items requested by your solicitor.
- Sign Contract & Pay Deposit: Typically 10% of purchase price.
- Prepare for Completion: Arrange remaining funds, removals, and agree on completion date.
- Receive Keys & Move In: Funds are transferred, keys handed over, and ownership confirmed.
- Confirm Post-Completion Tasks: Solicitor files Stamp Duty payment and registers you with HM Land Registry.
Solicitor Checklist for Property Purchase/Sale
- Take Instructions from Client: Clarify property details, parties involved, mortgage arrangements, timelines, and special conditions.
- Verify Identity & Source of Funds: Complete anti-money laundering checks and ensure financing transparency.
- Obtain & Review Title Deeds: Check ownership, boundaries, covenants, and registered charges via HM Land Registry.
- Draft or Examine the Contract: Prepare or review sale/purchase contract for legal accuracy.
- Raise Pre-Contract Enquiries: Investigate planning permissions, disputes, warranties, and fixtures/fittings.
- Arrange Searches: Local authority, drainage, environmental, and Land Registry searches.
- Review Mortgage Offer: Assess terms, notify lender of conditions, and report to client.
- Prepare for Exchange of Contracts: Secure deposit, confirm readiness, agree on completion date.
- Exchange Contracts: Legally bind both parties with signed contracts and deposited funds.
- Pre-Completion Checks: Confirm funds, finalize statements, update Land Registry info.
- Complete the Transaction: Transfer funds, release keys, and hand over documentation.
- Post-Completion Duties: Submit SDLT return, pay Stamp Duty, and register new owner with HM Land Registry.