Buying a house at auction in Ireland

An auction turns the usual buying process inside out. Everything that normally happens after sale agreed, the survey, the legal checks, the loan offer, has to happen before you bid. On the day, the fall of the hammer is a signed contract. This guide walks through what to do before, on and after auction day.

How an auction sale differs

In an ordinary sale, "sale agreed" means nothing is binding yet. You have weeks to survey the home, read the contract and get your loan offer. Either side can walk away until contracts are signed. Read what sale agreed means.

At an auction, the winning bid is the signed contract. The law calls it unconditional: there is no clause that lets you out if the survey is bad or the mortgage falls through.

Before the auction: the legal pack

The seller's solicitor prepares a legal pack, which is a bundle of documents, before the auction. It holds the contract for sale, the title documents, planning papers, the searches and any special conditions. The auctioneer (with a PSRA licence) makes it available to anyone who asks, usually online.

Your solicitor (check the Law Society's register) reads it before you bid. Read about the conveyancing solicitor. They look for the things that would stop an ordinary sale. A gap in the title, an extension without planning permission, a right of way, a tenant in place, a charge that has not been released. In an ordinary sale these come up as questions after sale agreed. At an auction, you buy with them.

Some packs allow a buyer's solicitor to raise questions before the day. Many do not. Expect to pay the solicitor for this work even if you do not win. Read solicitor fees.

Before the auction: the survey

A survey is a report on the home's condition from an engineer or building surveyor (Engineers Ireland or the SCSI). Many auction homes are older, empty, or in need of work, which is often why they are at auction. The survey costs €300 to €600 plus VAT for a standard report, or €1,500 to €3,000 plus VAT for a full structural survey. Read about the house survey.

You pay for it before you know whether you will win. That is the cost of bidding with your eyes open. Read what to look for when viewing so that the viewing itself tells you whether a survey is worth paying for.

Mortgage approval first, and in full

Approval in principle is a lender's early view of what it might lend. It is not a loan offer. Read approval in principle. At an auction you need the full loan offer before the day, which means these must already be done.

• The lender's valuation of the auction home, about €185. The valuer may value it below the price you end up bidding, and the loan is a share of the valuation, not of your bid.
• The full application, with every document. Read the mortgage documents checklist.
• Mortgage protection and home insurance arranged to start on closing.

Some lenders will not lend on a home that is not habitable, which includes some auction homes. Ask the lender early. A broker (on the Central Bank's register) can tell you which lenders take auction purchases; read about the mortgage advisor.

The loan offer has a closing date risk too. If the auction's closing date is four weeks away and the lender needs six to release the money, you are in breach. Match the two before you bid.

On the day: the money

Three figures matter on the day.

• The guide price, sometimes shown as the advised minimum value or AMV. It is the auctioneer's indication, not a cap. Homes sell above it.
• The reserve. The lowest price the seller will accept, kept private. If bidding does not reach it, the home is withdrawn.
• The 10% deposit. Paid the moment you win, by bank draft or a transfer set up in advance. It is not refundable.

You sign the contract on the day. Your solicitor is usually with you or on the phone. Then the clock runs to the closing date in the contract.

A worked example

Dara bids on a three-bed house with a guide price of €240,000. Before the auction she spends about €2,500: a survey, the solicitor's reading of the legal pack, and the lender's valuation. Her loan offer is for €225,000, 90% of the valuer's figure of €250,000.

She wins at €255,000.

• 10% on the day: €25,500.
• Balance on closing in five weeks: €229,500. Her loan gives €225,000, so she needs €4,500 more from savings.
• Stamp duty at 1%: €2,550, paid through her solicitor within 44 days. Read stamp duty.
• Solicitor's fee and outlays on top, typically €1,500 to €3,000 plus VAT and €400 to €1,200.

Her cash needed, from the pre-auction costs to closing, is about €38,000 beyond the loan. Had she bid €270,000, the loan would not have risen with her, because it is tied to the valuation. The cost of buying calculator builds this closing statement for any price.

Online auctions

Most auctions in Ireland now run online, on the auctioneer's platform. The rules are the same as a room auction.

1. Register before the day with proof of identity and address.
2. Show proof of funds or your loan offer.
3. Lodge a bidder deposit, taken against the 10% if you win and refunded if you do not.
4. Bid in a set window, often with the end time extended when a late bid comes in.
5. The winning bid is a contract. The 10% is taken at once and the contract is signed electronically or by your solicitor.

Read the platform's terms before you register, because they set out the bidder deposit, any buyer's fee and how the contract is signed.

After the auction: closing in weeks

The contract fixes the closing date, often four to six weeks out. Your solicitor's work is short because the legal checks were done from the pack. The lender releases the money to your solicitor on the day, the balance goes to the seller's solicitor, and you get the keys. Your solicitor then pays the stamp duty and registers your title. Read closing on a house.

If you miss the closing date, interest runs on the balance at the rate in the contract, and the seller can serve a notice that ends in losing the deposit. Plan the dates with the buying timeline before you bid, not after.

When an auction suits, and when it does not

Auctions suit a buyer with cash, or with a loan offer in hand, who has read the pack and seen the survey. They suit homes that lenders are wary of only when the buyer has cash. They do not suit a buyer who needs a subject-to-mortgage clause, time to sell another home, or a second look. Read buying with cash.

Where this leaves you

Before you register to bid, have three things: the solicitor's view of the legal pack, the survey, and a full loan offer that matches the closing date. Then set the dates with the buying timeline. The first-time buyer journey covers the steps that still apply, and get quotes puts you in touch with a solicitor and a surveyor who can turn the pack and the survey around before auction day.