Tips for buying a property at auction
Property auctions are a great place to pick up a bargain. However, you must be prepared to move fast.
On the one hand, the speed of an auction sale has the benefit of avoiding a long, drawn-out buying process. On the other hand, you need to be sure you know what you’re doing before you enter the fray.
Here are some tips to get you started.
Familiarise yourself with property auctions
Go along to a few property auctions to gain experience of the process. You can sit in on a property auction without having to register. This will make you feel more comfortable when it comes to bidding on a property.
You can find plenty of information on where to find local auction houses at:
You should check to make sure the auctioneer is regulated. You can use NAVA Propertymark Protected to ensure you’re dealing with a qualified professional. This is important as it guarantees any money you pay is held in dedicated auction client accounts, which protect both the buyer and seller.
Next, sign up for auction house mailing lists so you can see the type of properties that come up for sale.
Check out what property is on the market
Browse auction house catalogues and arrange for some viewings. Bear in mind, there is usually only about a month between the issue of an auction catalogue and the date of the auction.
When you go on viewings, it can be helpful to take a surveyor, builder, architect or other property professional. Houses that come up for auction could be in a poor state, have been empty for a number of years, or are in some way unusual – that’s why it’s vital to make a comprehensive inspection.
You may want to get a survey done if the property is in a particularly bad condition. This could save you money in the long run.
The auction house’s guide price is a suggestion. It may be set deliberately low to attract buyers to the auction. The property could end up selling for much more.
Also, guide prices can change before the auction, especially if there’s plenty of interest.
Make sure your funds are in place
If you place a successful bid, you’ll have to sign a contract and pay the deposit immediately.
Most auction houses will ask for a 10% deposit and will require two forms of identification. You’ll then have anything from between 14 days to six weeks to pay the remaining balance of the purchase price and complete on the property.
If you’re a cash buyer, you must make sure you have access to your funds. If you need a mortgage, you’ll need to get a mortgage Agreement in Principle (AIP) from your lender.
You could look for a bridging loan to pay for the property, if it will take too long to get a mortgage agreed. However, bridging loans are only meant for the short term and are expensive – so you should be certain that there will be no problem with getting a mortgage in place for the long term.
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