Well, first things first, why should you buy a property at auction? Auctioned properties come in all shapes, sizes and conditions – buying one can be a great family project or investment for the future. At auction you could pick up your dream home in an amazing location for just a fraction of the new build price; or not. This is the challenge of the auction house and the main reason why so many people love buying real estate in this way.
Finding an auction
Speak to a local estate agent, scour the local paper or do some online searching to find a property auction in or near your area. You might be surprised how many there are, auctioned properties are big business.
Finding a property
Some people turn up to the auction on the day, flick through the catalogue and buy on instinct. Whilst this might work out for some, buying in this way is a huge risk as your purchase may turn out to be structurally unsound, ineligible for planning permission or undesirably located. Finding these things out after the hammer has dropped and regretting your purchase is never a good feeling, so make sure you take your time to look through all the houses available for auction and pick the best of the bunch (although don’t get your heart too set on it, after all this is an auction and you may be outbid at the last hurdle!)
It is highly recommended that you view any potential purchase yourself before the day of the auction. Doing so enables you to see anything that may have been glossed over in the auctioneer’s description of the property and allows you to make a fair assessment on your own terms. It might be worth paying an estate agent to give you a valuation of the property, both in its current state and after any renovations that you might have planned. The auction house is legally bound to supply you with a legal pack, read it thoroughly and ask a solicitor for any advice if there is anything you don’t fully understand.
On The Day
On the day of the auction, bring a deposit of 10% of the expected house value with you; and maybe a little extra in case the bidding is intense and comes to more than you expected. The rest of the price must be paid with twenty eight days. Decide on a max value you are going to pay for the property and stick to it – the risk of getting overexcited in the heat of bidding war and paying over the odds for a property is very real, so be careful and stick to your guns! If the auction ends without the property reaching its reserve price it might be worth speaking to the auctioneer and asking to see the seller privately to come up with an arrangement. This is often a good way to grab a bargain as the seller will be more likely to sell for a lower price than they originally asked for.
Happy house hunting!
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