KIS Bridging Loans
Call us FREE on
0800 644 6555
8am to 10pm - 7 days a week

Property Auction Finance Frequently Asked Questions and Jargon Buster

Property auction FAQs

How do I find out where property auctions are taking place?

It is not the simplest of tasks finding out where property auctions are being held because they are not usually advertised to the general public, being more specifically aimed at professional property buyers. Local estate agents in the area that you would like to buy in will normally have information about local auctions. Some larger property auction houses may auction properties throughout the whole of the UK, so it may be worth looking at their catalogues.

A property auction will normally occur 3 to 4 weeks after the property catalogue has been made available.

How should I select a property to bid on at auction?

People buy property at auction to either live in themselves, to keep as an investment property to rent it out, to develop or improve and then rent it out or sell it for a profit, or to just simply flip it, meaning sell it on for a quick profit.

Decide what sort of property you are looking for, in what area and what you are planning to do with it. Then look for auction houses in your chosen area who sell the type of property that you are looking for. Register with these auction houses and they will send you their catalogues which will contain details of properties that they will be auctioning in the future.

Is it important to view properties before bidding on them?

Before bidding on any property at an auction it is very important that you take the time to go and view the property first. Once you have viewed the property you may decide not to bid on it, or you may want to adjust the price that you are willing to pay for the property.

Viewing information will be detailed in the auction catalogue, and quite often group viewings are arranged for all interested parties. This can be interesting because it will give you an idea about how much interest there is in the property.

Can I make a bid before the start of an auction?

Yes you can and if your offer exceeds the amount the seller thinks that they will obtain at auction they may well agree to sell to you. In these circumstances you will need to sign the auction contract before the start of the auction, and you will be bound by the same contractual obligations as if your bid was the winning one made at auction.

Do I have to attend an auction in person in order to bid?

No you do not have to attend an auction in order to bid. There are other ways that you can bid at a property auction. You can make an arrangement with the auctioneer to:

  1. Bid by telephone – in which case on the day of the auction a representative on behalf of the auctioneer will have telephone contact with you. They will relay to you other bids being made and also relay your bids to the auctioneer.
  2. Bid by proxy – which involves registering your maximum bid in writing to the auctioneer. Then the auctioneer will arrange for a representative to bid on your behalf during the auction. If you win the auction it can be for any amount up to your maximum bid.
  3. Ask a friend or solicitor to attend and bid on your behalf – in which case in addition to making the arrangement with the auctioneer, they will also need a letter confirming that they are bidding as your representative.

What is the legal pack provided for auction properties?

The legal pack is provided by the seller’s solicitor and it contains all of the relevant legal information on a property being sold at auction. This pack is made available by the auction house to any potential buyer to review before the auction.
It’s very important to thoroughly read and review every document in the legal pack. If you’re new to property then you should have a solicitor look over it for you.

What is in the legal pack provided at auctions?

The legal pack should contain:

  • Office copy entries – a.k.a. official copy of Register of Title obtained from Land Registry confirming the ownership of the property
  • Land Registry and other searches
  • Property information form
  • Special conditions of sale
  • Fixtures and fittings form
  • Management information pack
  • Details of any leases or tenancy agreements
  • Planning permission documentation
  • Replies to any pre-contract enquiries

How do I bid at a property auction?

  • Before bidding at auction make sure you have funds in place, have done your checks on the property you intend to bid for and know what your maximum bid is going to be. Discipline yourself not to exceed your maximum bid and if you have any concerns about the property or unanswered questions it is best not to bid as you may regret it afterwards.
  • Arrive in good time for the auction so that you are there to hear the auctioneer’s opening comments and in particular any last minute items with regards to the lot or lots that you are interested in. If you do not like any of the additional comments, or are unsure about them it is probably best not to bid.
  • Before bidding starts on each lot the full address will be read out, or at least the lot number. Make sure that you bid on the correct lot!
  • To make a bid clearly raise your hand, auction card or catalogue so that the auctioneer can see it. If you wish to make a bid that is different to what the auctioneer has called simply call it out. The auctioneer will decide whether or not to accept it!
  • Once the hammer goes down the property lot will be sold to the highest bidder, provided that it has reached the reserve price.

What is a reserve price at a property auction?

A property seller will set a reserve price for their property prior to the start of the auction. It is not normal for buyers to be given information as to what the reserve price is. Properties will not be sold unless the reserve price is met, however if the highest bid is close to the reserve price the auctioneer will usually suggest that the highest bidder comes and talks to them. This is to see if either the bidder or seller can come to a compromise and agree a sale.

Do you have to pay straight away after winning an auction property?

If you win a property at auction then you will be required to pay a minimum deposit of 10% and exchange contracts on the day. After this you have 28 days to complete.

Can you pull out after winning a property at auction?

You can, but this is a very costly choice.

As you must exchange contracts on the day of the auction, this makes it a legal contract and if you pull out of the purchase you will be in breach of that contract.

You will be met with hefty penalties and you will lose the deposit you put down.

Can you purchase a property at auction as a first-time buyer?

Yes you can purchase a property at auction even if you are a first-time buyer.

Can you just turn up to a property auction and bid?

Yes you can, but you likely have to show ID and register as a bidder before the auction starts.

However, we would never recommend bidding on a property where you haven’t viewed it in person and read the legal pack first so you fully understand what you’re getting in to.

What do you need to take to a property auction?

If you are bidding on a property at auction then you will need to take ID, proof of address, your method of payment, and your solicitor’s details.

If you are paying cash then you need to ensure that the money is readily available.

If you are financing the purchase then you need to have the deposit ready and you should attend with a decision in principle for your choice of funding. This way you can bid with confidence knowing that everything is in place.

Do you need a solicitor to purchase a property at auction?

Yes you will need a conveyancing solicitor when you purchase a property at auction. They will also need to review the legal pack provided by the auction house and handle the legal work related to your auction finance application.

Can you get pre-approved for auction finance?

Yes, we can get you a decision in principle before the auction takes place so you can go to the auction knowing your funding is sorted.

How much can you borrow with auction finance?

Typically, you can borrow up to 75% of the property’s value.

However, you may be able to borrow 100% of the purchase price if you have other properties that can be used as additional security.

How much deposit do you need for auction purchases?

You will need to pay a minimum deposit of 10% on the day of the auction. However, to obtain auction finance, you will need to put down at least 25% if you’re just using the one property as security.

How long does it take to arrange auction finance?

We understand that time is of the essence when it comes to auction purchases, so we can get funds in place for you in 48 hours.

Do you need a valuation done for auction finance?

All bridging loan facilities will require a valuation to be carried out on the property being used as security. If one has been done recently then this may be acceptable to the lender and you won’t need to do another one.

What types of property can you buy with auction finance?

Auction finance can be used to purchase:

  • Residential properties – including residential buy to lets
  • Commercial properties
  • Semi-commercial and mixed-used properties
  • HMOs
  • Unmortgageable properties
  • Repossession properties
  • Agricultural properties
  • Land (with or without planning permission)

Can you use auction finance to purchase land?

Yes, auction finance can be used to purchase land with or without planning permission.

Can you use auction finance to buy a car?

Technically speaking, you could use auction finance for a car auction rather than a property auction if you’re looking for fast funds to secure your purchase.

However, as auction finance is a type of bridging loan, you will need to use a property as security for the loan. This means you would need to be willing to use your home or another property you own.
You also need to have a viable exit strategy which is usually the sale of a property or refinancing a property.

How can you get the cheapest auction finance rate?

Quite simply, by using us!

Being independent means we can search the whole market on your behalf, including lenders that only work with brokers and not customers directly. This means you can be confident that you’re getting the best price out there.

We also do not charge broker fees which means you will have access to our years of expertise without incurring any additional costs.

Property auction jargon buster

What is a bid?

A ‘bid’ is the amount that buyers offer to pay for a property at auction.

What is an auction catalogue?

The catalogue details all the properties that are up for sale at an auction, including guide prices, details on how to view each property, and the general conditions of sale. The catalogue is usually released a few weeks before an auction.

What is completion?

The ‘completion’ of a property purchase is when the full amount has been paid to the seller and the ownership of the property transfers.

What is a contract documentation charge?

This is a charge that buyers must pay to the auctioneers after a successful bid.

What is a deposit?

The deposit is the amount you must pay on the day of the auction after successfully winning a property. For auction purchases, this must be at least 10% of the purchase price. After this, you have 28 days to complete the purchase in full, which means paying the rest in cash or with a finance facility.

What does entering a property mean?

This is the term used for putting a property up for sale in an auction.

What does exchanging contracts mean?

On the day of the auction, you must pay your deposit and exchange contracts after successfully winning a property. The exchanging of signed contracts from both the buyer and seller means that the purchase is legally binding for both parties.

What is a gavel?

A gavel is the hammer used by auctioneers. Once the auctioneer bangs the gavel on the table, the bidding for the property is over and the highest bidder wins the property.

What is the guide price on an auction property?

The guide price gives an indication of the sort of price that the seller expects for the property. This is to give buyers a level that they should expect to bid at. However, this should not be relied upon as a valuation for the property and the eventual sale price could be higher or lower than the guide price.

What are money laundering regulations?

All buyers and sellers must provide the auction house with official documentation to prove their identity and residential address to comply with anti-money laundering regulations.

This is to prove that the buying or selling of property is not being used to illegally launder money.

What is the legal pack provided at auctions?

This is a set of documents, provided by the seller’s solicitor, detailing all the necessary information about the property. Any potential bidders can view the legal pack before the auction.

What is a lot?

When a property, or any other item, is put up for sale at auction, this is called a ‘lot’. Every property is given a ‘lot’ number.

What is a proxy bid?

This is where the auctioneer, or a member of the auctioneer’s team, bids on behalf of a buyer who cannot attend the auction in person. They are given a maximum bid amount before the auction.

What is the reserve price on auction properties?

The reserve price is set by the seller of a property and is the minimum amount that they will accept. This means that the auctioneer will not sell the property below this amount. This figure is kept confidential and bidding will usually start below the reserve price.

What are special conditions of sale?

Special conditions of sale are any conditions relating to the sale of a property which are outside the standard set of terms and conditions. Any special conditions of sale will be detailed in the legal pack.

What is a telephone bid?

A telephone bid is where the auctioneer, or a member of the auctioneer’s team, is on the phone to a bidder who can’t attend the auction in person. Unlike a proxy bid where the bidder pre-sets a maximum amount, a telephone bid is live.