It’s easy to see why buying a property at auction appeals. Homes bought this way are often cheaper than those bought via an estate agent, everything is agreed at the sale so there’s no chance of anything falling through at the last minute, it’s a completely transparent process and, lastly, it’s quick—very quick.
As with all major purchases, however, there are important factors to consider with property auctions. Read on for the key dos and don’ts of attending and bidding at a property auction.
DON’T get carried away. Establish exactly how much you can afford to bid beforehand and stick to it. Bidding at an auction means entering into a binding legal contract—this is not the place for second thoughts.
DO be aware of the costs involved. As well as the price of the property you’ll also have to pay your solicitor or conveyancer, stamp duty and an administration fee to the auction house.
DON’T be slow. Speed is of the essence when it comes to property auctions. There’s typically four weeks between the publication of an auction catalogue and the sale so make sure you act quickly and that you have everything you need—whether that means getting easy access to a deposit or a survey of the property.
DO be patient. Property auctions can be quick but they still require considerable effort and outlay, from researching the property to ensuring your financing is in place—all essential requirements before heading to the auction house.
See also: House Surveys: What They Look For
DON’T pay too much. It’s easy to get carried away but make sure you don’t pay wildly over the odds for a property. This is easily avoided by making sure you assess how much the property is really worth before the auction. Go to viewings and consider taking a professional such as a builder along with you to spot any potential issues.
DO be imaginative. The condition of auction properties can sometimes leave much to be desired—hence their lower prices—but look past the superficialities and you could secure a hidden gem. Compare the guide price with other homes on sale locally to see if it’s realistic, and make sure you factor any necessary renovations into the overall cost of the purchase.
DON’T overlook the legal details. Before the sale you’ll typically be given a pack of legal documents for the property such as the special conditions of sale and the title deeds—amongst others. Ask a solicitor to check these over thoroughly.
DO get a survey of the property before the auction. You don’t want to commit yourself to a sale and only discover afterwards that the property needs thousands of pounds worth of repairs.
DON’T assume you’ll pay the guide price. Auction houses often set prices lower than what the property is likely to sell for in order to entice buyers.
DO have your financing organised. If your bid is successful, an auction house will usually need a 10 percent deposit on the day of the sale and full payment within 28 days. If you’re not paying cash then you need to make sure before the auction that you have a loan arranged—this will usually be an agreement in principle from a mortgage lender.
DON’T jump straight in. Immerse yourself in the world of auctions—from reading as many brochures as you can get your hands on to attending property auctions as a mere observer. This is a competitive world you’re entering and it’s vital you get a sense of how it works.
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