Not all properties that are available at auction are sold during the event. So what happens to them and can you buy an unsold auction property?
Why might a property remain unsold at auction?
A property might not receive any bids during the auction or the bids that are received don’t meet the seller’s reserve price. This is the minimum price that the seller is prepared to accept for their property. It is confidentially agreed with the auctioneer who cannot sell the property for less than this amount.
This doesn’t mean that the property is not worth buying — there are various reasons why it may have received low bids or none at all. For example, the viewing slots may have been limited. Not being able to view a property before an auction can deter potential buyers from bidding. Another reason is that the seller’s price may have been unrealistic but they proceeded with the auction sale despite the auctioneer’s advice on this. Or the legal documentation may have been submitted late, not giving potential buyers adequate time to check it.
What happens when a property isn’t sold at auction?
Just because a property isn’t sold during the auction, it doesn’t mean that you’ve lost the chance to buy it. Not all sellers agree to post-auction sales but most do. They usually want to benefit from a quick sale under auction conditions without having to go through another auction. This means that you have an excellent post-auction opportunity to buy a property that you’ve had your eye on.
Interested parties
After the auction, the auctioneer will reach out to all of the interested parties for the property. If you were a bidder or had previously expressed an interest in the property but were unable to attend the auction, this gives you the chance to submit an offer. The auctioneer will then put forward your offer, and any others received, to the seller.
At this point, you may be able to negotiate a price that both you and the seller are happy with. It’s worth noting that although a reserve price has to be met during an auction, a seller may be willing to accept a price that’s close to it after the auction so that they can still benefit from a quick sale.
You need to be ready to act quickly at this stage. If your offer is accepted by the seller, you will have to proceed as per the auction terms and conditions. For example, if the terms stipulate an unconditional auction sale, the contracts will exchange immediately and you’ll have 28 days to complete the transaction.
Advertised unsold auction lots
For properties that remain unsold, the auctioneer will continue to market them online under an ‘unsold auction lot’ listing. This means that you don’t need to have been to an auction or expressed an interest in a property before an auction to be able to buy it after the event. You can simply browse unsold auction lots that are advertised online by auction houses.
The property details will include the same information that you’d expect to find on a pre-auction listing. That way, you can still do your due diligence, such as arranging to view the property and checking the legal pack. You can check the fees payable if you proceed with the purchase and can usually download additional property information. For example, a copy of the Energy Performance Certificate, a floor plan and a list of the fixtures and fittings.
Generally, an unsold auction property is listed for a set price. This is often the reserve price that was originally set by the seller. The seller may agree to list their property at a reduced reserve price, however, to attract more potential buyers.
Prepare your finances to buy an unsold auction property
Whether bidding on a property during an auction or making a post-auction offer on an unsold property, our mortgage brokers can arrange your finances so that you’re ready to meet the short auction timescale.
If you need to use a mortgage to finance your auction purchase, our brokers can arrange your mortgage in principle in advance. That way, you know what the lender is prepared to loan you and can budget accordingly. Alternatively, you may prefer short-term finance and our auction specialists can arrange a bridging loan for you.
To discuss your financial options and the auction process, just give us a call on 01322 907 000. When your finances are in place, you can confidently offer on an unsold auction property that you’re interested in.