Online property auctions: what you need to know
by Housesimple on 1st January 2017
We all lead such busy lives these days, so it’s easy to see why online property auctions are now more popular than ever. After all, bidding and (hopefully) ‘winning’ a house in this way means you can buy a whole new property without even having to leave the comfort of your favourite chair.
But what’s involved? Here’s our quick guide to the basics of online auctions.
How do online property auctions work?
Companies that provide online real estate auctions – namely estate agents and auction houses – keep listings of available properties on their websites. Essential information like property details, photographs, and key documents are provided, as are opportunities to view the property in person before the auction starts.
If you find a property you like the look of then you’ll need to register in order to bid online. Before you begin, make sure you know all of the terminology too. Once your chosen auction starts, you can bid in one of two ways:
Live online bidding
You can watch the auction countdown live online and place bids in real-time to make sure you’re the winning bidder.
Online proxy bidding
If you can’t bid live then you can pre-submit your highest offer. If you manage to make a bid that matches or beats the reserve price, and is higher than all other bids, then you’ll win the auction. Simple as that.
What costs are involved?
If you’re the winning bidder then you’ll typically need to pay a reservation deposit of 5% of the purchase price (minimum of £5,000) within 24 hours of the auction ending. You’ll also have to pay the buyer's premium for the property.
What's different about an online auction?
Unlike a normal property auction where you exchange on the fall of the hammer; online property auctions offer an ‘Option to Buy’ period after the auction ends. This exclusive period gives you an uncontested opportunity to obtain the property, with a general timescale of 28 days to exchange contracts.
In a private online sale, the offers made to the seller are kept private – even after the sale is completed. In contrast, the terms and costs involved with the online bidding process are transparent from the start, so you can expect a fair and level playing field and won’t have to worry about any unpleasant surprises.