Investors and homebuyers looking to pick up a bargain this Christmas may want to consider trying their luck at a property auction.
For most, the property market goes quiet from the second week of December as attention turns to the holidays.
This means eagle-eyed buyers may be able to bag themselves a bargain on the open market – but property auctions could prove an even better way to secure a knockdown price.
Quick fire: On the day, if a bid is accepted, it becomes binding immediately. The buyer will need to complete a memorandum of sale and also provide a 10% deposit
There are big auctions coming up this week and next. Auctions giant Allsop has 225 lots going under the hammer on Thursday 14 December, followed by a further 165 lots on Tuesday 19 December.
Savills Auctions is also having its final sale of 2023 taking place tomorrow. Its catalogue features more than 220 lots across the UK, including a mix of residential, commercial and development opportunities.
There is something for all budgets, from a grade II listed end of terrace property with three flats in Chelsea that has a guide price of £1.95million, to a three bedroom house in County Durham with a guide price of just £15,000.
Robin Howeson, head of Savills Auctions says ‘Throughout the year we sell opportunistic properties and December could be as good a time as any to find a bargain under the hammer.
‘December could also be a good time to buy as we have seen an increase in activity over the last couple of auctions.
‘We sold over £100million worth of property at our auctions in November, making it a record month for us, so we certainly aren’t currently seeing any signs of a slow down before Christmas.’
Is it too late to sign up for December auctions?
There are typically only four weeks between publication of an auction catalogue and the auction itself— so buyers never have long to organise themselves.
Unless they can squeeze in a last-minute viewing, anyone looking to bid in these December auctions may have to buy it without seeing the property inside first – which is a risk. But if they are happy to do so, it is still possible.
In order to bid online or in person, buyers will typically first need to register.
They will need to provide details about themselves, identification documents and solicitor’s details. This can be done ahead of time, or by turning up a little early on the day.
Don’t hang around: There are typically only four weeks between publication of an auction catalogue and the auction itself— so buyers never have long to organise themselves
It is also recommended that any prospective buyers ask a solicitor to check through the legal documentation before they place a bid at auction. Legal packs for each property will be available on the auctioneer’s website.
Legal packs tend to provide a summary of the good and bad points of each particular lot within a short time period.
Searches are often included in the legal documents, but if not, a solicitor can apply for them before the auction.
Cautious buyers prepared to pay for a surveyor ahead of auction can also typically do so.
For those requiring a mortgage to finance the purchase, the advice from auctioneer Strettons is to make arrangements before bidding.
While it is possible to fund an auction purchase with a mortgage, not all banks offer them. Most buyers will be paying in cash and there are several restrictions that need to be considered.
Auctioneers may be able to recommend mortgage brokers or development finance specialists if required.
A bargain in Chelsea? A Grade II listed end of terrace property comprising three self-contained flats has a guide price of £1,950,000 in Savills auction tomorrow
How do property auctions work?
The property will typically be listed with several prices. The first is the guide price, which is used as a ballpark figure to show potential buyers whether or not it might be in their budget.
The bidding for the property may start at a lower figure than the guide price, and work up.
It may also have a reserve price, which typically refers to the minimum price that the seller is authorising the auctioneer to sell at.
The reserve price is not disclosed to bidders but can be up to 10 per cent higher than the guide price, so bear that in mind when bidding.
On the day, if a bid is accepted, it becomes binding immediately. The buyer will need to complete a memorandum of sale – typically either on the day or within a couple of days – and also provide a 10 per cent deposit.
They will then typically have between two and six weeks to complete the sale.
Most auctioneers allow buyers to bid online and over the phone.
Robin Howeson of Savills adds: ‘All our auctions are lived-streamed online via an accessible virtual auction room, creating a level playing field, enabling all bidders to bid in confidence.
‘We offer several ways to bid – online, over the telephone or by submitting proxy bids in advance.
‘Potential bidders are required to register online prior to the auction and property viewings can be arranged prior to the day itself.’
One of the major attractions of buying at auctions is that they are all conducted in a day, meaning buyers and sellers can purchase or sell quickly.
They majority of properties brought to an auction do tend to sell. For example, Strettons boasts that is has a 85 per cent auction sale success rate in the last 12 months.
‘If you buy in a December auction you’ll have the keys in January which is a nice way to start the New Year,’ adds Howeson.
‘The process also rules out any chance of counter offers, gazumping or long chains holding things up.
‘Prices achieved depend on the asset and opportunity on offer, there are always myriad opportunities in an auction catalogue and it is a case of buyers doing their homework and due diligence ahead of the sale and deciding what price they are willing to pay,’ he adds.
