How to Buy Property at Auctions
Many of us will have at one time or another attended in person an auction or at the very least have seen one in action on television. Auctions come in all shapes and sizes from local auctions selling off house clearance items to themed auctions such as film / TV memorabilia or those focused on agricultural machinery. The viewing the lots, the bidding and the hammer are all part of the process of buying from an auction – Sometimes it is just the cash in your pocket or credit card that will enable you to walk away with the item you won, though sometimes bank fund transfers and finance / mortgage agreements are required.
How to purchase property at auction is a popular topic and one which many people involved in purchasing (and selling) property will have at least investigated and most certainly been tempted by. When viewing property for sale online, especially via the major property portals such as Rightmove and Zoopla, listings will come up that are going to auction and showing a guide price. Most times the guide price is very attractive in being under market value, though the final sale price is most likely to exceed the guide price.
What are the advantages of buying by auction? The sale price is very much likely to be less than what you would pay if the property / lot was listed normally ie via an estate agency with no time restrictions on selling. Another big advantage to purchasing at auction is time in that you are likely to complete your purchase at a much faster rate on average (normally within 28 days).
Disadvantages of buying at auction do exist and these include you having to be prepared and ready to purchase upon the fall of the hammer for instance you will need the cash to pay within days or you will have had to arrange and have ready mortgage agreements in principle. The time for viewing the property / lots will also be limited as will the time be for you to carry out all investigations / surveys / reports. You are also not guaranteed that the property you have your invested time put in to will end up being yours as you can be outbid.
The process for buying at auction is not complicated and certainly not a scary way in which to purchase property. You are likely to grab yourself a bargain which for many will be worth the added effort.
Key steps in buying property at auction:
- Find your property – Research local auction companies / property portal websites. Use the term ‘auction’ when searching. Register with the auction company and secure yourself a bidding account and either attendance in person or remotely for the day of the auction.
- Investigation – Contact the auctioneer to book viewings and research all the required information you need in order that you make the right decision for you. Properties come up for sale at auction for many reasons and this might be because they are not suitable for everyday sales practises via high street estate agencies. Make sure you study in detail any and all legal packs for the property.
- Finances – Make sure you have your finances in order so to bid on the property you are interested in. You will require either the cash and / or agreed mortgage in principle. Please remember that you may be halted if the bids exceed your finances – You are advised to set yourself a limit on bidding and not exceed this amount as when the hammer falls and you are the highest bidder then you’ll be bound by the terms and conditions of the auction.
- Winning the auction – You will be required to pay the set deposit (usually 10% of the purchase price) for the property and from there the legal paperwork can commence between you and the seller. Once that hammer has fallen then you are the owner of the property so do think about any insurances you may require on it. The completion of the mortgage will also have to take place and this will include a survey by the lender to make sure the value of the property is worthy them lending on.