Auctions are an excellent opportunity for purchasers to avoid the drawn-out buying process and secure a bargain with competitive prices. However, there are several factors to consider before, during and after buying via auction.
For those who are looking to buy their first property at auction, NAVA Propertymark has provided five things that consumers should know before making their bid on auction day.
1. Read the small print
One of the most crucial pieces of advice for buying at auction is to thoroughly check the terms and conditions of the auction house you use, as you need to follow their terms and by entering a bid you are agreeing to them. When buying a property, you will be required to pay the deposit and any administration costs immediately, along with the balance of the purchase price within 20 business days. Familiarising yourself with what needs to be paid, and when, will help you to avoid any unexpected costs. Chattels sales will always have a buyer’s premium to pay over and above the hammer price. The goods being sold may also be subject to VAT.
2. No backing out
If you are the highest bidder and the hammer falls, you cannot change your mind and back out of the sale. With online auctions, such as eBay, there are many bidders who change their mind and end up backing out of the sale. When attending real-life auctions, however, this does not apply, and is one of the biggest misconceptions about bidding. Pulling out of the sale at auction could land you with huge costs, or you can be taken to court.
3. Consumer Contracts Regulations
Whether you’re buying online via a store such as John Lewis or through an online marketplace, the item falls under the Consumer Contracts Regulations and, in some cases, you can return it for a full refund under the Distance Selling Regulations. However, at a real-life auction you can view the item in advance and choose whether to bid, meaning you won’t be protected by this law – even if you bid via live webcast.
4. Reserve Prices
At an auction, sellers may set a Reserve Price – a figure which the lot cannot be sold below – with the auctioneer. Any guide or estimate must not be placed below a fixed reserve, as it would be misleading to bidders.
5. Protect yourself
Most importantly, you must choose a regulated auctioneer who delivers the highest standards. This will guarantee that any money you pay will be held in dedicated auction client accounts that will protect both you and the seller.
“Although there are many things to consider when buying an item at auction, it’s a chance to have fun and it really doesn’t need to be complicated,” James Emson, president at NAVA Propertymark, said.
“If you do your homework, familiarise yourself with the lot you want, the terms and conditions that apply and are clear with your bids, you’re in with a great chance of success and maybe getting your hands on a bargain.”