I Bought a Property in an Online Auction: Case Study

Online auctions are relatively new to the property world but work just like normal auctions, but before the online fun really begins you will need to have your paperwork in order and do your homework.

Finding An Auction

Paul Wiggins was 29 years old and looking to get onto the property ladder for the first time. He’d heard there were a lot of repossessed properties that you could buy cheaply at auction. He decided that he would try his luck and attempt to buy a property at a cut down price online.

He looked online and found there were a number of online auctions taking place.

“I registered with one site and I was able to register my details and access details for the online auction. I was surprised at how many properties they had online,” says Paul.

Visiting The Property

He found the details of an online property auction that was taking place in four weeks time.

He went online and obtained a copy of the brochure which had details of all the properties up for sale.

“I was looking ideally for a two bedroom semi-detached house. I had a deposit of around £12,000 so really didn’t want to spend more than £120,000,” Paul says.

You must have your finances in order and be ready to go through to completion within 28 days of buying the property online. You must also have a deposit to pay for the property within 48 hours of buying the property online, which is usually around 10% of the asking price.

“I looked through the catalogue online and found a couple of properties that suited my price range and location. I had been told that on average properties normally go for 15% higher than they are advertised for, so I went for the properties with the lowest price tag,” says Paul.

He then went to visit a few and one in particular stood out, a two-bedroom terraced house just outside of Manchester, which was his ideal location.

Putting Your Finances In Place

“Once I had found a potential home I spoke to a mortgage lender about how much I could borrow.

"I also instructed a surveyor to value the property and asses it for any structural damage”, says Paul.

One of the downsides of buying at auction is that you will need to pay for a valuation of a property that you may not be successful in buying. A survey will normally only cost a couple of hundreds of pounds but it could highlight any problems with the house, so it is worth it.

“Once the valuation had been carried out and I had been given the all clear there was nothing to do but wait for auction day,” says Paul.

Auction Day

“I had already registered my interest for the property online a few weeks earlier,” says Paul.

There are normally two ways you can bid online, you can either enter your highest bid before the live auction starts, or you can watch the auction live with a webcam and make your bid as the auction is carried out.

“The starting price for my property was £100,000. I let a few people start the bidding before me and when I entered the bidding the property had already reached £120,000, the auctioneer seemed to be increasing the bids by £5,000 with each bid,” says Paul.

“I was starting to feel anxious when the property reached £135,000 as I knew I couldn’t afford to go much higher. It was down to me and one other man,” he says.

Luckily Paul’s completion stopped bidding at the £140,000 mark and Paul was the winning bidder.

Paying For The Property

“My mortgage lender had already told me they could lend me up to £160,000, but I only had a £12,000 deposit. I was excited about winning the bid, but now needed to find another £2,000 in the next 48 hours.

“Luckily my parents stepped in and were able to help me out,” he says.Paul paid the deposit online the next day and within the 28 days the property was his, all that was left to do was to furnish and decorate.

Buying online can be exciting and cost effective, but it can also be stressful and disappointing if you lose the property you had your heart set on.

It’s easy to forget that you are dealing with real money when you are online, so don’t get carried away or your could find yourself committed to a property by the click a button.