Buying property at auction isn’t just for those on television or for seasoned developers. Increasingly, it’s seen as a way to cut through the lengthy and occasionally convoluted buying process – and potentially secure a bargain if nobody else has spotted a property’s potential. Another plus is that once the deal is done, there is no danger of getting gazumped or the whole chain collapsing at the last minute.
However, there are certain pitfalls to watch out for so it pays to be prepared and gather as much information in advance of the auction as possible.
Do Your Research
Use the guide price by all means but keep in mind that this has probably been set at a level to tempt buyers. You could approach local estate agents or look at recently sold prices in order to get a more realistic idea of what you’ll pay on the day.
You should seriously think about a survey, to enable you to factor in additional costs such as future structural survey. Remember that many auction properties will not be in a good state so you’ll often need to set aside sometimes quite substantial amounts of money in order to cover renovation and building works.
Unfortunately, you will not be able to recoup a HomeBuyer’s Report or structural survey if your bid is not a success or if you decide not to proceed – but at least you will be as informed as you can be if you do.
In addition, there will often be a legal pack which you can ask for from the auctioneer. This may include the title deeds, leasehold information and environmental surveys. It’s a good idea to ask a qualified conveyancer to examine these documents, to make sure you’re not heading for any nasty surprises down the line.
Sort out your finances
Unless you’re lucky enough to be a cash purchaser, you’ll need to arrange a mortgage in principle that’s ready to go once the hammer falls. On the day, if you’re successful, you’ll have to pay 10% – with a further 90% to be paid in full a month later.
A word of caution – only pay what you can afford. It is easy to get caught up in the excitement of an auction but have a clear and absolute limit in your mind before you start bidding.
Talk to the experts about how to buy a house at auction
If you’re thinking about buying a house at auction and would like a conveyancer to examine a legal pack and support you through the process, call us on 0800 652 37 37 or use our enquiry form to request a consultation.