Buying a property at auction isn’t necessarily reserved solely for investors. Although frequented by individuals who are looking to add value to their existing property portfolios, auction houses don’t carry any restrictions as to the type of people that can attend and bid on a lot. It doesn’t matter if you’re a first time buyer, a retiree, or simply looking for a new family home at a lower price, buying an auction property can be cost effective and eliminate the potentially long process of buying a home in the conventional way.
Many individuals who are visiting a property auction for the first time, with a view to bidding and purchasing a new asset, may find the process a little daunting. It may be best to actually visit a few auctions and ‘sit in’ without bidding, just to get a feel for the way auctions are run. However, when you have found the right house in the right location and you see that it is going to auction follow our quick guide to buying an auction property to make sure you have all the basics in place.
Before the Auction
Property auctions are often advertised in the local press. As soon as you find your nearest auction contact the auction house and request a brochure.
Once you have the brochure in hand take your time to peruse each property, the property descriptions, and make note of any that are of particular interest to you.
Make sure you arrange to view the properties you are interested in. Buying blind at an auction is never a good idea and could end up being an overly expensive mistake. Viewing times on each property are usually set and detailed with the property auction brochure.
All auctions come with conditions attached so make sure you read those in the brochure. As with buying a property in the conventional manner, all the typical land and property searches need to be done. These will require a solicitor and in some cases a surveyor will need to be appointed.
Your finance to purchase a property will need to be in place prior to you bidding at auction. Should you make a successful bid on auction day you will need access to a 10% deposit and the further 90% within a 28 day time period.
If you require of financial help to buy a home at auction then make sure you have arranged a mortgage in principal with the help of your mortgage broker. Failing to have your finances in place prior to auction day could result in a loss of your 10% deposit for failing to complete within the set time frame.
On Auction Day
The big day has arrived and you are hoping to secure a property that you can invest a little time and effort into and call it your own, but if your bid is to be successful, there are a few things you need to do to ensure the process runs smoothly;
You will need to take two forms of identity with you to the auction house as well as your cheque book , further bank details, and any other relevant financial information which shows how you are funding your purchase.
Secondly, you will need to register with the auction house on arrival. At this stage you will receive your bidding number/card and you should also ask for a copy of the addendum sheet where you can check for late information and alterations to what you may have seen in the original auction brochure some weeks previously. It is always possible that the property you are interested could be withdrawn from sale or have been sold before the day of the auction.
When the time comes for you to make your bid, ensure you do so clearly and concisely so that the auctioneer can register your interest. Either nod your head or raise your hand as and when you wish to raise the bid on the property that holds your interest.
Things to Remember
- Buying at auction is a legally binding undertaking. It carries the same implications from a legal perspective as buying a property away from the auction environment.
- As soon as the hammer is down and the auctioneer declares a property as ‘sold’ the lot becomes the sole responsibility of the purchaser. This also means that it needs to be insured and secured as the property is now yours.
- Prices displayed in any property auctions brochure are named as guide prices; and for good reason. The guide price is simply an estimation of what the vendor or respective representatives expect to achieve however, in most cases be, prepared to pay above and beyond any listed guide prices, and particularly if there are a number of prospective purchasers showing an interest in the same lot.
Choosing to buy a property at auction is a great way to find that perfect investment or new home for you and your family. Homes that are in need of modernisation or have some more serious structural often feature within the pages of auction brochures, but if you’re not afraid to take on a property challenge and have your finances in place, then a visit to your next local property auctions could be just what you’re looking for to make your mark on the property ladder.