How Exactly do Property Auctions Work? A Guide for Property Investors
Buying a house at a property auction involves three distinct phases. The first is the preparation period that begins after the auction catalogue is released. The second is the day of the auction itself. The third is the completion period after the property and keys are transferred to the buyer.
Preparation Period
The auction catalogue is typically released about three weeks before the auction. This is a crucial period for the buyer to conduct thorough due diligence. During this time, the buyer needs to carefully research the property, review the legal pack, and ensure they fully understand what they are bidding on. This may involve tasks like visiting the property, obtaining a survey, and reviewing any necessary documents. Completing this preparation is essential, as the buyer will be legally bound to the purchase once the auction is complete.
The Day of the Auction
On the actual auction day, the buyer will compete with other interested parties to bid on the property. The process is fast-paced, with the auctioneer rapidly calling out bids. Once the gavel falls and the auctioneer declares the property sold, a legally binding exchange of contracts occurs. From that point on, there is no turning back, for better or worse, for both the buyer and the seller. The buyer must be prepared to complete the purchase according to the terms outlined.
The Completion Period
After the auction, the buyer typically has around 28 days to complete the purchase, though this timeframe can vary. It is essential during this period to have all the necessary finances, legal representation, and paperwork in order. The buyer must ensure they can secure any required mortgages or other funding, and work closely with their solicitor to finalize the transaction. If everything goes according to plan, the buyer will receive the keys and officially own the property at the end of the completion period.