A Guide to Buying a Property at Auction

| March 19, 2015 | 0 Comments

Buying a property at auction is often a quicker and easier way of getting on the property ladder for young people. It’s also a popular buying method for people looking to build up a buy to let property portfolio.

Auctions can be intimidating environments though, and there are a lot of financial considerations to take into account before you place a bid. This easy guide will help make sure your property auction goes as smoothly as possible.

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Why Buy at Auction?

The main reasons a lot of people buy at auction revolve around issues of cost, ease and speed. Unlike buying a property in the ordinary way and joining a house buying chain, with an auction, the sale moves fast. As soon as the hammer goes down, the property is pretty much yours, as long as you can pay for it!

The kinds of properties that get sold at auction are those that have problems and reasons for being cheap. This means you can get a great bargain if you’re willing to rectify the problems with the property and put some work into decorating it.

 

How to Keep Your Finances in Order

Your budget should be set well in advance, and remember that you’re going to have to pay about 10% of your winning bid on the day of the auction. The remaining 90% will then usually have to be paid within 4-5 weeks depending on the rules of the auction house. Make sure you can afford this before you bid.

If you need a mortgage, make sure the arrangements are made in advance of the auction. The lender should use AMC Nationwide to get an independent appraisal. A full, comprehensive survey is also a good idea. As already mentioned, there are often faults with auction properties.

 

What to do Before the Auction

Preparation should be at the forefront of your mind before you enter the auction house. It’s rarely a good idea to go in blind. Make sure you’ve visited the property beforehand and checked out all its faults. If a deal seems too good to be true, it probably is. Calculate the cost of repair, redecoration and maintenance before you buy.

You should also make sure you fully understand the way in which the auction will work. You don’t want to be raising your hand at the wrong time or bidding on the wrong property. Talk to people who have bought at auction before, and visit auctions beforehand.

 

What to do During the Auction

Once the auction is underway, the pressure will be on, and it can be easy to get caught up in the excitement of the occasion. Remember your budget, which should already be firmly set by now. Don’t go over your maximum budget, your budget was set for a reason and shouldn’t be broken, no matter what.

It’s a good idea to take a friend along with you, even better if they have property auction experience. They can nudge you when things get heated and bring you back down to Earth before you blow your budget.

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Category: Home Loan

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