The biggest take away for buying at property auction is:
- Research Research Research – Ensure that you have researched key elements
- Stick to your plan – Ensure after you have done your research you form your plan and stick to it.
For a quick and sure way to buy property, choose auctions- but know this: once the hammer falls, the process is final. It is time to pay
Why You Should Buy At Auction
If you’ve an eye for unique properties that agents don’t have the slightest idea on how to sell, then auction is the perfect choice. In addition, if its potential is overlooked by others then you might find a deal.
Nonetheless, auctions are not only for those who have insider knowledge. In recent years, auctions have become a favourite among buyers who can’t be bothered with the traditional forms of buying. The sale is final once the hammer falls so there is no chance of any last minute changes. And you get a chance to see the entire bidding procedure. Therefore, it is highly unlikely that you’ll be gazumped and the estate agent will be unable to hide much from you.
Downsides/Inconveniences You Should Consider when buying
we have sought to highlight below the downsides/inconveniences, we have said inconveniences as these are things that shouldn’t deter you from ever using an auction, but are things that should be considered.
Although there is transparency in the buying process at an auction, you could get sucked into a bidding war. Losing out means loss of money you have already spent on researching and conducting surveys on the property.
You could find yourself in an unfortunate situation where you spent money and time to ensure that the property is deserving of bidding on, only to discover that the property was bought by someone else before it went to auction.
The following are main downsides when buying at auction:
- Wasted Money
- Wasted Time
As part of your journey you should Research Research Research. good research will cost money,
expenses to view the property, expenses such as surveys, expenses such as legal advice.
if you don’t win the property then this is all lost.
Research Research Research, this take time t can take hours and days, understanding location, understanding survey reports, legal packs, property market dynamics.
All the time you invest is time wasted on the property if you lose. however you will become more knowledgeable and more adept at your due diligence process
The Cost Of Buying At Auction
How You Find An Auction
First, you’ll have to determine your area of interest and get in touch with the auction houses that handle that area. Request a catalogue from them and then subscribe to their mailing list. Check the websites of the UK Auction List and Essential Information Group if you need information of future property actions.
Remember: You have to act quickly if you like a location because the auction normally occurs with four weeks of publishing the auction catalogue.
Things You Should Do Before Auction Day
The following are main things that should be done before the auction
- Research Research Research
- Consider Getting A Survey Done
- Review The Legal Pack
- You Don’t Have To Pay The Guide Price
- Make Sure You Organise Your Finances
- Observe the catalogue, and preselect the properties that are of interest to you. Get in touch with the auctioneers and schedule an appointment for viewing the properties.
- Be prepared for anything- its normal for auction properties to be in a run-down state. That is why you’re able to get these outrageous bargains.
- Ensure your bidding amount is appropriate. If you take a builder or architect with you when you go to view the properties, you’ll be able to get an insight on the actual costs should you become the owner of the property.
- Its unwise to rely on the guide price (advertised price). Check with your neighbours and local real estate agents and get their opinion. You can then compare the prices with that of other properties that are on sale locally. This will give you an idea of a realistic price when you attend the auction.
- After buying a home in Scotland, a buyer was at the losing end. Soon after the sale, the local council condemned the house. The buyer lost the property and had to pay the cost for the demolition. Get all the facts before you buy. The cost of a homebuyer’s report is approximately £600 and you’re looking at spending more if you need a structural survey as well. Also, if you change your mind about buying the property or if you were unsuccessful at bidding, you’ll lose all of that.
- Auctioneers normally provide legal packs for properties that buyers have an interest in. These consist of title deeds, list with fixtures and fittings, regional authority and environmental searches, form with sellers information and any pertinent leasehold information.
- Get a solicitor to check this to see if there are existing discrepancies or hidden agreements that could cost you more later on.
- The guide price is to attract buyers and is generally set much lower than the going price of the property. It’s best to monitor the guide price. If it increases before the auction it is suggesting much interest in the property.
- If you plan on getting a mortgage ensure you sort out a mortgage in principle prior to the auction so that it will be ready once you become the owner of the property.
- As soon as the hammer falls, your 10% becomes payable and the remaining 90% a month after. It you are unable to pay the 90% your 10% becomes non-refundable, and you won’t stand a chance of purchasing the property.
- You will incur other loses as well, such as paying the costs to re-sell the house and any deficit between the agreed price and the price the property was finally sold for. It’s possible too that you can be asked to pay daily interest up to the time the property is sold.
Things You Should Do On Auction Day
The following are main things that should be done on the auction day
- Keep A Cool Head, Don’t Panic
- Be Early
- Have Everything You Need For The Day
- Don’t Worry About Properties Not Reaching Reservation Price
- Auctions can be scary for some people, while others may find it exciting. Keep your cool on the day.
- Don’t get caught up in the excitement of the moment and spend what you cannot afford. There will be many more if someone else gets this one.
- Two forms of identification will be needed; passport or utility bill plus proof of your ability to pay the deposit of 10%.
- Don’t give up if the house never went for the reserve price. Wait around after the auction because the seller may decide to take the highest bid. You’ll only know if you approach the seller when the auction is done.
Modern Method Of Auction – (Buying)
Recently, there has been a new type of auction, popularly known as the modern method of auction. Some real estate agents use this method because it allows for online bidding on the property by buyers and the buyer pays a reservation fee that is not refundable. This allows the buyer a longer timescale for completion and time to select mortgage finance.
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