Thinking about buying a property at auction?
In the current changing property market, popularity in buying properties at auction has grown.
If you’re sat there wondering, ‘is it worth trying to buy a house at auction?’ Here’s what the potential benefits include:
- Securing a property at a potentially lower price compared to traditional buying methods.
- Speedy process. It takes roughly 28 days to complete an auction purchase.
- Diverse property selection meaning the more unique and niche properties.
Swayed?
If you’re considering buying a property at auction we’ve put together a list of our top tips before you go to auction and when you’re at auction.
Before Auction
Before you head over to the auction house there are a few things you need to consider.
1. Do your research
Before diving into the auction scene, it’s crucial to conduct thorough research on the properties and the auction itself.
Start by exploring various auction websites or contacting local auction houses to get information on upcoming auctions and the properties available.
Scrutinize the auction catalog carefully, paying attention to property descriptions, photographs, legal documents, and any additional information provided.
Furthermore, for a better understanding, study the market trends and property prices in the area to determine a realistic bidding range.
2. Arrange viewings and ask questions
Once you’ve seen something you like, just as you would viewing any other property for sale, ask for a viewing. Chances are, if nothing else they will have an open house date for you to attend and ask questions.
This is a no-brainer as properties up for auction tend to be fixer uppers. You’ll want to inspect everything and make notes as you’re going.
A bonus tip would be to take a builder, handyman, plumber or electrician with you to view the property. They’ll be able to pick up anything you may miss and be able to give estimates on costs associated with anything that needs fixing up.
If you’re keen to pursue the property ask to kept updated of any addendum’s (alterations or changes to the sale conditions). You could also ask them to inform you if there’s any possibility of the property being sold before the auction date.
3. Seek advice and check the small print
Buying a property at auction involves legal and financial complexities that may be unfamiliar to you.
Obtain all the particulars of the auction. The particulars will contain key information but you may need to request a separate legal pack to get the full picture.
It’s advisable to seek professional advice from a solicitor or conveyancer experienced in auction purchases.
Engaging their services early on will enable them to review legal documents, highlight any potential issues such as any hidden covenants or loopholes that could end up costing you more than you bargained for.
Additionally, consult with a mortgage advisor to understand your financing options and obtain an agreement in principle before the auction.
4. Set your budget
Setting a budget is a crucial step in any property purchase, and it becomes even more vital in an auction setting where emotions can run high.
Before you do anything, make sure you pay attention to the guide price and any reserve price of the property you’re looking to bid on.
Make sure you know how much the deposit would be and check which method of payment is required by the auction house.
Generally you’ll need at least 10% of the purchase price for a deposit.
5. Arrange your finance in advance
Unless you’re a cash buyer you’re going to need some form of finance to purchase the property. Depending on your circumstances this may be in the form of bridging loans or auction finance.
You’ll usually need to arrange something quickly and these forms of finance can take as little as 14 days.
6. Attend auctions as an observer
Attending auctions as an observer before participating as a buyer can provide valuable insights into the process.
Observe how the auctioneer conducts the bidding, how potential buyers behave, and how properties are presented.
This firsthand experience will help you familiarize yourself with the atmosphere, pace, and dynamics of the auction, making you feel more comfortable when it’s your turn to bid.
Take note of any strategies used by experienced bidders and learn from their tactics.
At the Auction
You’ve viewed the property, you’ve got your finances in order, what next?
7. Attend in good time
Any last minute additional changes or information for the property will made available by the auctioneer. Get there in plenty of time to take note of any changes as they may affect your decision to bid.
8. Stick to your budget and be prepared to walk away
You’ve already determined your financial limits based on your affordability, be prepared to stick to them throughout any bidding process.
When the excitement builds up during an auction, it’s easy to get caught up in the heat of the moment and overspend.
Set a maximum bid for each property you’re interested in and avoid exceeding it, no matter how tempting the competition becomes.
It’s crucial to know when to walk away if bidding exceeds your predetermined limit. Another opportunity will arise, and it’s better to wait for a property that fits within your financial boundaries.
9. Make sure your prepared if your bid is successful
If your successful, the moment the gavel falls you are bound by the auction terms and conditions.
As we’ve said you’ll likely need at least 10% of the sale price as a deposit available to pay on the day. You’ll also need two forms of ID.
You’ll likely then have 14 days to six weeks to complete and pay the remaining balance of the purchase price.
Remember, pulling out of the sale could result in costs.
Buying at auction can be a viable option for securing a property.
By following these nine tips, you’ll enhance your chances of success and minimize potential risks.
They’ll contribute to a smoother and successful auction experience.
Remember, with the right preparation and approach, a property auction can present a brilliant opportunity to find your dream home or make a sound investment.
Need advice about financing an auction property contact us. As experienced advisors we know the market inside out and can find you the best deals possible or alternative options based on your circumstances.
Contact us at Online Mortgage Guru on 0345 3669799 or email us via info@theonlinemortgageguru.co.uk.
