Homebuyers could save big by heading to auction - But is it worth the risk?

Homebuyers could save big by heading to auction - But is it worth the risk?

Published 3rd March By Peter Smith
minute read

Research by Barrows and Forrester has shown just how much UK homebuyers could save by snapping up a property at auction, as well as looking at the potential drawbacks of this cost effective approach to homeownership. 

Auction property prices

The biggest reason property buyers enter the auction room is price. On average, auction homes in Britain sell for -41% less than those on the open market. With the national average house price currently £278,120, this represents an average saving of almost £115,000.

While this saving varies from region to region, it climbs as high as 48% in Scotland while London is home to the biggest monetary saving with a £87,000 saving. 

Speed and certainty of purchase

After price, the greatest advantage of buying a home at auction is speed. Unlike buying on the open market, sales are not subject to typical delaying factors such as chains. So, when the hammer falls on an auction property, it takes very little time for the buyer to receive the keys. Typically, around a month compared to around six months on the open market. 

Another advantage is that purchases are certain - there is no way the seller or buyer can decide to back out at the last minute because the fall of the hammer, is itself, a legally binding moment. This brings an additional sense of certainty to the process, allowing all parties to complete their processes without fear of fall through. 

Greater transparency

Another advantage of property auctions is the overall transparency of the bidding process. Bidders have full knowledge of the price as it rises, and full control over whether to raise the bid or drop out. 

This prevents buyers from falling foul of the common open market practice of gazumping, in which one buyer has their offer accepted before it is suddenly revoked because another buyer has swept in with a better offer at the last minute. 

What to watch out for

There are usually a good variety of homes available at auction, some in good condition, but many with perceived baggage; baggage that might deter buyers on the open market. This is why auctions are popular with professional buyers, but if regular buyers are looking for a ‘fixer-upper’, for example, auctions are a great place to start. 

Because auction properties often require some work, the bidding tends to start well-below market value, and, as already discussed, the sale prices are often well-below average, too. For many people, this provides an opportunity to buy a larger home than they could afford on the open market, or in a location that is otherwise out of their price range. However, despite the significant upfront savings, to suggest that auctions offer better value for money than the open market is misleading. 

Yes, auction buyers regularly secure great deals for themselves, both professionals and amateurs.  But, more often than not, they are buyers who are able to renovate the property, at least partially, themselves. Otherwise, the money required to renovate can quickly negate the auction savings. 

There are a couple of extra things to be aware of at property auctions. The shorter buying timeframes mean less time for surveyors and solicitors to do their jobs, thus reducing levels of due diligence. Buyers must also be ready, right then and there,  with the finances in-place to meet the required agreement with the seller’s solicitor and, as such, there is a real risk of buyers going over budget, perhaps carried away in the heat of the moment, and placing themselves in financial difficulty.

Finally, anyone who is interested in selling a property at auction should know that the auction house will take a commission of around 2.5% of the final sale price. There is also an entry fee, usually around £300 for each property, and sellers must also provide an auction legal pack which costs at least £200 to produce.

Managing Director of Barrows and Forrester, James Forrester, commented:

“Buying at auction is more popular now than ever before. It’s fair to say that the rise of online auctions is responsible for this, not least because it helps everyday buyers avoid the intimidating environment of the traditional auction room, surrounded by competitors who are bidding every day. 

However, it’s important to note that it requires more thought than your usual late night eBay splurge and while greater accessibility is a positive, it has also increased the number of buyers getting in over their heads.

Just like the open market, the financial agreements you’re making at auction are very real and deal with very large sums of money. It’s vital to be prepared, have your finances in place, do your homework on the properties you’re planning to bid on, and ensure all of the important surveys and checks are completed before the hammer falls.”

Contact us here for any property queries.

Sold price data sourced from PropertyData

Auction information sourced from Allsop: Dispelling some auction myths – the advantages and disadvantages of buying at auctionHOA: How to sell your house at auction,  and HOA: Buying and selling with online property auctions

Additional information sourced from Auction-Link and PropertyRoad

Table shows the average house price for open market and auction homes in Great Britain, alongside the £ and % difference.
Location Auction average guide price Local area average price (Dec 2021 UK HPI) Difference - auction vs local (£) Difference (%)
Scotland £93,399 £180,485 -£87,086 -48%
East of England £182,872 £339,502 -£156,630 -46%
North West £113,147 £200,172 -£87,025 -43%
North East £83,534 £147,214 -£63,680 -43%
East Midlands £138,547 £235,004 -£96,457 -41%
South East £228,681 £380,237 -£151,556 -40%
South West £192,527 £314,037 -£121,510 -39%
West Midlands £130,757 £212,229 -£81,472 -38%
Wales £127,921 £204,835 -£76,914 -38%
London £341,459 £521,146 -£179,687 -34%
Great Britain £163,284 £278,120 -£114,836 -41%

Similar news

Your home is your biggest investment

Selling your home is a big deal. Buying a property is an investment - not just financially, but also into your family life. Where you buy is just as important as what you buy. Our team deliver a transparent and customer-centric service that guides you through the property market with confidence.

Contact us
Your home is your biggest investment

Our commitment to you

Barrows & Forrester was founded in 2015 by property developer James Forrester. As an agency we believe in working with and improving our community. Our aim is to demonstrate that being an independent agency offers you far greater benefits that working with faceless national entities. That’s why we were awarded the Excellence in Real Estate Award 2020 at the Signature Awards Midlands for our attention to detail with our clients, our community work, and delivering a service like no other local estate agency.

Speak to an expert
Our commitment to you

Contact Us

Your personal data stays between us.

× Share this page:

Tenant Info for branch