The
auctioneer's job is to sell the property for as much money
as possible and he'll bluff you where he can. If there's
a reserve price on the property, he can't sell below the
reserve.
The
guide price is not necessarily the same as the reserve,
although it could be close. Also, the auctioneer will not
disclose the reserve before the auction but, you should
notice when the auctioneer uses words like "the property
is in the room" or "I will sell", etc. because
this means the reserve has been met.
When
attending auctions, you'll often notice that people can
be reluctant to start the bidding. In this case, the auctioneer
will take a bid from an imaginary bidder to get things moving.
In fact, he's allowed to take bids in this way until the
reserve is met. This is called taking bids "off the
chandelier" (or "off the wall" in the less
salubrious auction venues).
When
you're standing at the back of the room, you might able
to tell when the auctioneer is making things up AND the
point at which he stops doing so and looks for real bids
(remember, he can't make up false bids after the reserve
is met). This gives you clues as to how much interest there
is in the property and, if you're bidding, whether anyone
else is actually in the running. Here's your reason for
attending a few auctions before the one you intend to buy
at, because you'll get to know how the auctioneer operates.
Ready
to buy at the auction
Before
you event attend, make sure the lot in which you're interested
is still going to be offered on the day. Lots can be withdrawn
for all kinds of reasons and you don't want a wasted journey.
Get
there nice and early in order to complete the paperwork,
get a good spot and familiarise yourself with the room.
Also, the order in which lots are offered may change due
to withdrawals and other factors, so don't miss out just
because you weren't expecting your lot to be up so soon.
Prior
to being allowed to bid, you need to register and obtain
a number. Not all auctions are run the same, so be sure
to follow correct procedure for the auction you're attending
- you'll find all the details in the front or back of the
auction catalogue.
You
will certainly need ID, usually including photo ID, and
proof of residence. You'll also need a 10% deposit to pay
over for your chosen lot if you are successful. The minute
the hammer falls, you have exchanged on the purchase and
are obliged to complete (now you see why it's important
to have your finance in place!!).
Know
your upper limit and DO NOT go above it. It's very tempting
to think "Oh, I'll just go another £1K or another
£500" and before you know it you'll have been
inched up a few thousand away from your original limit.
If you can't trust yourself to stick to your budget, get
someone else to register and bid on your behalf.
If
you can't attend the auction, the auction house may have
the facility to accept proxy or telephone bids. Some of
them are moving toward online bidding, too. The disadvantage
to you is that you can't see the auctioneer's behaviour,
nor that of your fellow bidders and bidding at auction does
have similarities to a game of poker.
After
auction, you'll usually have 28 days to complete, but this
can be less - 14 days is not unusual (now you see why it's
important to have a legal team that can move quickly).
Alternatives
to buying at auction
Even
after all you've made all the preparations and taken every
possible precaution, you might just find that buying at
auction is simply too stressful for you. If it is, there
are ways you can still tap into great bargains - maybe even
better than you'd get in the auction rooms, so here are
a couple of alternatives....
Consider
buying before or after the auction, always remembering that
if you do secure a deal before or after, the auction rules
and all the conditions relating to completion timescales,
etc. still apply.
Making
an offer pre-auction
If
you want to do this, call up the auctioneer and ask whether
pre-auction offers are being considered for your chosen
lot. Some large publicly or privately owned organisations
won't look at such offers because they have to be seen to
be achieving the best price and can only truly do this if
they go to auction. Some will accept, some will negotiate
with you. Remember, they can only say no and you're still
free to go back with a revised offer or to wait and bid
at the auction. If your offer is accepted, nothing is legally
binding until you exchange, so move quickly to avoid being
gazumped.
Alternatively,
you could buy AFTER auction. If a lot remains unsold when
the bidding finishes, it's because the reserve price hasn't
been met. That's the time to head to the back of the room
and find out what the reserve was and make your best offer.
If you make an offer at the reserve and you're the only
one, the chances are that you'll get the deal. Of course,
there's nothing to stop you submitting an offer below the
reserve and letting the vendor consider it. After all, the
vendor is pretty vulnerable at this point, having paid for
an auction submission without achieving a sale. The only
thing that could go against you being successful if you
do this is if another bidder offers more.
And
you thought the auction was over.
