The Importance of Surveys Before Bidding at Auction

Buying at auction is an exciting prospect. Who can resist an opportunity to bid for a property that fits all your criteria – the right location, a realistic price point and the ideal style, size and age that was on your wish list. Yet, if a property has piqued your interest, it’s important to do your due diligence before you get into the bidding stage. 

The very nature of an auction means you might not know every detail about the home, plot of land or investment property you’re interested in which, potentially, could be a red flag. However, rather than missing out on a winning bid, it’s essential to know the full auction process and have everything in place before you reach the auction.

This guide outlines the legal obligation of purchasing at auction, some risks to be aware of with key advice on why arranging a survey can help you make an informed decision before the bidding begins.

Understand the Legalities

When you make a successful bid at a property auction, you enter into a legally-binding contract to purchase the property. You can’t withdraw or renegotiate after the auctioneer’s hammer falls because this action signifies that the sale has been agreed between you and the seller. 

Typically, at this point, you must pay a deposit and sign the contract within 28 days post-auction with the remaining balance due on the formal date of completion. If you fail to complete the purchase, you lose your deposit and may face legal action. Auctions move fast, but bidders take on legal obligations that are bound under the Consumer Rights Act 2015 and the Sale of Goods Act 1979 (SGA). Understanding these is key to avoiding costly consequences.

Organise a Survey 

Getting a professional survey completed on a property before bidding at auction is crucial as it can offer support if you get caught out when it’s too late, mitigating nasty surprises and/or costly work down the line. Remember, unlike a traditional property purchase, there is no backing out once you have won the bid, so you need to be fully aware of the property’s condition upfront.

A professional survey will point out any structural problems, issues that a layperson may not identify and that are not visually obvious, such as issues with the foundations, roof, damp proofing, etc. The surveyor will also highlight any signs of major defects or health hazards in the property, like subsidence, woodworm and the risk of mold growth in poorly ventilated spaces. Being aware of these before you commit to the purchase enables you to make an informed decision on whether and how much to bid.

In an auction setting, you won’t get the opportunity to negotiate down the price if unexpected issues come up in a survey after you have won the bid. So, whether you’re an investor, buying your first home at auction or you’re looking to buy a second home in Cornwall, carefully considering the property you’re interested in is important. That is why it’s so important to have all the information beforehand. 

Going into the auction well prepared on a property’s condition with a survey plus your own visual checks will cancel out the risk of being caught out later on. A survey can also help evaluate what repairs and renovations may be needed and the likely costs involved.

Arrange a Visit 

Arranging a viewing of a property before bidding at auction is highly advisable. Unlike in a traditional property purchase, you generally can’t ask to view a property after you have won the bid at auction so the only chance you have to see the property is before auction day. Seeing the house will support what you’ve learnt about the property from the survey. A physical viewing and checking the property allows you to factor in what is purely cosmetic against what might be more serious (and costly) issues.

A proper visit lets you get a real sense of its size, layout and architectural style and surroundings. This is invaluable insight when deciding how much to bid. Poring over floor plans and photos is useful but it can’t substitute seeing the property in person.

Viewing the property first-hand highlights any issues not evident in listing photos, like a cramped floorplan or noisy location. It also lets you see any outstanding features that may motivate you to bid higher, like a bigger than expected garden or the scope to extend.

Know Your Budget 

Whether you’re a first-time auction buyer or an investor with a growing portfolio, it’s essential to know your maximum bidding budget and stick to it on the day.It’s all too easy to get caught up in the moment when it comes to competitive bidding which, in the worse scenario, might lead to making overly-ambitious bids that stretch your finances.

Before auction day, you need to work out the absolute highest amount you can reasonably afford for that particular property. This means factoring in not just your deposit and mortgage budget, but also any renovation costs, survey fees, legal fees and moving costs associated with the purchase. There is no point winning a bid only to realise later you don’t have the funds to complete.

Having a clear budget prevents getting emotionally caught up in the bidding war and helps you stay grounded on spending limits. It also means you know when to stop and walk away if the price exceeds what you can realistically afford or if there are two bidders unrelentingly competing against each other.

Bid in Confidence 

Buying a property at auction can be an exciting way to purchase but it does come with risks if you are not fully prepared. Doing your due diligence by organising a professional survey, visiting the property yourself before auction day, and setting a clear budget, allows you to bid with greater confidence and avoid nasty surprises down the line.

A survey gives you insight into the true condition of the property so you are aware of any major defects that could be costly to fix. Visiting the property enables you to assess its suitability for your needs and experience it beyond just photos. Knowing your maximum budget helps you avoid getting emotionally caught up in the bidding process and overspending beyond your means.

Following this advice shows you have researched the property thoroughly, and arm you with the knowledge needed to make a rational, informed bidding decision. It provides greater peace of mind that if your bid wins, it will be on a property you can afford and that suits your requirements. Undertaking these steps takes time and effort upfront, but gives you the confidence to bid in a way that leads to auction success and acquiring your ideal property.