For individuals hoping to get on the property ladder, the prospect of buying at auction might seem daunting. However, it can be a great way to buy a property for much less than the market value. The key to buying at auction is all about preparation and understanding the next step before it happens because the process moves so quickly you won’t have time to research as you go. Here are our top tips for house hunting and buying a home or commercial property at auction.
Tips for buying at auction
Find Your Local Auction House
The first step to buying at auction is to find a list of all the local auction houses that deal with properties in your chosen area. Each auction house will publish their own catalogue of properties that will give you a good place to start scouring the listings. On average, there will be around 2 weeks between the time the catalogue has been distributed and the date of the auction, so if you see something that catches your eye, you’ll need to move quickly.
Once you have a list of properties that you like, it’s time to start arranging viewings. Contact the auction house directly to express your interest in the properties. At this stage in the process, you’ll want to keep your eye out for the telltale signs of structural damage. As the process moves a lot quicker, you may want to take along a builder or a surveyor to your viewings so you can look for potential problems.
Get Your Money In Order
While you can use a mortgage to buy a property at auction, you will need to bear in mind that 10% of the value will be due as soon as the gavel hits the table or when the hammer falls. The rest will usually be due within 28 days of the sale. It is possible to get a mortgage Agreement in Principle, but this might not be available soon enough to complete the sale. Instead, consider buying with cash, or find a short-term loan to bridge the gap between the sale and the mortgage approval.
Instruct A Solicitor
When buying a house through a more traditional route, you would instruct your own conveyancing solicitor to check the title deeds and any local information that is relevant to the property. Getting this in order beforehand will ensure your chosen solicitor can move quickly if your bid is successful. However, most Auctioneers will also provide an in-house solicitor to assist on the day, please check this with the relevant Auction House.
Put In An Early Bid
You don’t have to wait until the auction day to put in a bid. If you see something you like and you think you can put in a strong offer, it’s worth speaking to the auction house as they may accept an early bid. Although you run the risk of losing out on the possibility of getting your property for a lot cheaper by bidding through the usual way at Auction.
On The Day
You’ll need to be prepared on the day, so it’s worth asking in advance what you will need to bring and arrive with plenty of time to spare. When it comes to buying at auction, it’s essential that you stay calm and collected throughout. You might love a property, but if the bidding goes beyond your budget, you have to know when to walk away. You need to be certain about the property you are buying, as the 10% deposit will often be non-refundable and will be a binding contract when the hammer falls.
If you’re thinking about buying at auction, it really is a great way to save money on your first property or to start your property portfolio. It needn’t be scary, provided you’ve done your research and understand the risks and opportunities involved.