It’s important to understand all of the costs involved with a property auction transaction when buying or selling in this way.
The costs come in several different forms, and it’s key to factor these in before committing to buying or selling a property at auction. In this guide, we’ll cover the associated costs you’ll likely incur with this kind of transaction.
Each auction house sets its own buyer’s fee, which is the auction commission and also called the buyer’s premium. This is typically added to the hammer price as a percentage of the final sales price, but some are subject to a minimum fee. The buyer’s premium is usually set out in the catalogue, so make sure you’re aware of this before the auction and factor it in when making your bidding plan.
Additionally, as getting an auction legal pack reviewed when you’ve found a property you want to bid on is so important when buying at auction, the cost of this needs to be considered and factored in. We’ve calculated the average fee for this to currently be approximately £1,000, which has been based on the average of 10 conveyancing quotes.
There are also other buyer supplementary fees, including conveyancing fees and disbursements, stamp duty, survey fees, buildings insurance, and auction finance arrangement fee. These all need to be taken into account when purchasing a property at auction.
When selling a property at auction, your costs will likely be lower than what a buyer will incur, but it’s still important to know what fees you’ll need to pay. This can include a seller’s fee and an auction entry or set-up fee. You’ll also need to pay for the creation of the auction legal pack, which typically costs about £1,000.
Additional fees you may need to pay depending on your circumstances include any relevant moving costs and mortgage exit fees. You’ll also need to check if you owe any Capital Gains Tax from selling the property, so you understand all of your liabilities associated with the sale. Payment of this tax is due 60 days after the property transaction completes.
Use our Capital Gains Tax calculator to give you an idea of what you might owe when selling your property. It’s recommended to seek independent tax advice or a qualified accountant to help ensure you’re paying the right amount.
Sellers can pass on some of their costs to buyers through special conditions clauses. This information often appears in the legal pack drafted by the seller’s solicitors and would form part of the contract for the sale. Sellers should keep in mind that this can impact bidding levels depending on the amount of demand there is for the property.
Special conditions clauses can include additional liabilities for buyers that are due upon completion, including:
On top of that, if you’re planning to buy a site or piece of land, there could be an additional clause that stated if you were to get planning permission, you’d have to pay the vendor a percentage of the uplift as a result of securing that. If that’s the case, you would also need to budget for that eventuality.
It’s important to calculate your buying or selling costs to fully understand the financial implications of property auction transactions. This ensures you know exactly what fees you’ll have to pay and when. Make sure you research what the fees are for a particular auction house you’re looking to buy or sell from.
Whether you’re buying or selling a property, you can use our auction fees calculator to help you plan for all of the associated costs involved with your purchase or sale. You can use some of our average prices based on our extensive industry knowledge and research, delete certain items that aren’t relevant to you, and adjust specific figures if you’ve had certain costs confirmed.