Buy properties using an online auction or ‘Buy Method of Modern Auction’ has become increasingly popular over the past 5 years. This has become even more true since the Corona Virus lockdown measures came into force in March of 2020, making real world auctions almost impossible.
Each of the online auction houses has a slightly different system for bidding but the basic principal remains the same. The property is first viewed by the prospective buyer or representative. Next the buyer creates an account with the online auction house. From there bids can be place at any point during the bidding window, which is typically around 2 weeks.
Properties will be listed with a ‘reserve price’, meaning if this price is not met then in theory the vendor does not have to sell. Typically, the reserve price is around 10% above the asking price. Once you are the winning bidder, there are usually some strict requirements on next steps, a typical example, the winning bidder might be required to pay a 4% fee to the letting agent within 24 hours on top of the purchase price.
In addition, there often a set timeframe by which the sale must complete, usually between 4-8 weeks. Due to these stricter buying requirements, online auction can be better suited to cash buyers because they can act more quickly. Online auctions can represent an opportunity to grab a bargain but be sure to factor in the additional buying costs and as ever, do your due diligence on the true value of the property.
Watch my video on my youtube channel to learn more about online auctioned properties in the UK.