Buying property at an auction may seem like an alien concept to many people; after all purchasing something as large as a home is not a decision you should take lightly or rush into.
However, property auctions are growing in popularity, as not only are they quick and easy in their nature, auctions have a unique ability to avoid the lengthy house buying process; because as soon as that mallet hits the wood, the property is yours – this means no sales falling through at the very last minute!
For all the positives though, there are things that could go potentially very wrong, hence it pays to do your research. Here’s our guide to safely and successfully buying a property at auction.
Locate an auction:
First things first, you’ll need to find out when and where there is a property auction taking place – preferably relatively nearby. Property sections of local papers and magazines generally report when there will be an auction occurring. Alternatively you can speak to local estate agents and ask them to keep you in the loop.
Find your Ideal Property
Once you have located your auction, the next step is to look through and thoroughly study its brochure. Yes, it is not unheard of to turn up to an auction unprepared and bid on any property that takes your fancy at the time, but this isn’t the most responsible way of obtaining a property and you may end up stuck with something you weren’t expecting.
Coming to the auction prepared will allow you to focus on the property/s that you know will be best for you in the long run and give you a better chance of obtaining them in the auction.
Once you’ve got your property/s in mind, it’s a good idea to contact the auction organisers and arrange to have a viewing. Often properties are bought at auction in order to do-up, then sell on for profit. With this in mind, it’s essential for a bidder to know exactly what they’re dealing with – namely what kind of a state the property is in. Potential bidders should take an architect, builder or surveyor with them to assess the property and ensure there aren’t going to be any nasty surprises which will end up costing the buyer more than the house is worth (this is not unheard of!)
Remember, though, that the time period between a catalogue being published and an auction taking place is around 4 weeks, and therefore if you want to get a viewing in then it’s important to act fast and contact and builders/architects you would like to accompany when viewing.
As with buying any property, it is vital to do your research on similar properties and compare price and condition to ensure you’re going to buy your chosen property for a fair price. More often than not, in a bid to impress buyers, a property’s guide price at auction is set relatively low – so have in mind what the actual market value should be (by doing your research) and make sure your bid stays in line with this. This way you will make sure you aren’t bidding an unusually high amount for a property, and you will know when to stop.
After expressing an interest in a property to the auctioneers, more often than not you will be given a legal pack to read over. Be sure to read it cover to cover, several times to ensure that there aren’t any legalities that could potentially have implications on the value of your property.
Get your Finances in Order
Obviously finances should be one of the main concerns when going to auction; you will need to have ten percent deposit with you on the day of auction and will have generally 28 days to collect the remaining cash; otherwise you will risk losing the property.
If you know you will require a mortgage, then discuss this with the bank beforehand and secure a ‘mortgage in principle’.
The Auction Itself
On arrival you’ll need to register; be sure to bring identification such as your passport/birth certificate with you as well as your ten percent deposit. It’s a good idea to arrive early so that you can get your bearings and find a good seat. Finally remember not to make any sudden movements that might indicate you’re putting in a bid!
When the bidding begins you need to make sure you stay calm and don’t get carried away and overzealous with your bidding; have a figure in your head and do not under any circumstances bid over this figure. If you are outbid then it just wasn’t meant to be!
If on the other hand a property fails to meet its reserve price then it doesn’t mean it’s over – the seller may well have been hedging their bets with an unrealistically high price and may therefore be willing to settle a deal with you outside of the auction. Talk to the auctioneers after the auction and they will be able to act as middle men between you and the seller.
Buying at auction is one of the best ways to get yourself a bargain on property – and nothing beats the feelings of elation when you manage to secure the property you’ve had your eye on for a great price!
As long as you go in prepared and keep focussed throughout, the outcome of the auction will rarely be one you’ll regret.