One advantage of buying a property at auction is that it allows you to buy or sell and exchange keys within 28 days. You can also save yourself a fair bit of money too if you make the right choice. However, if you get it wrong, it can cost you a lot of money.
Here are the most useful tips when it comes to making a successful buy:
- Go see the property
When you can, make sure you attend one of the viewings. It is easy to read the legal pack and presume because there are tenants currently living in the property that it must be in good condition.
If you are busy, it’s natural to think that looking at the floor plans and imagining what the property will look like once you have finished will be enough. However, you can overlook things such as water damage or poorly installed electrical systems. Issues not only take a lot of time but can be costly to repair.
- Define your plan for the auction day
Auctions can be a very exhilarating experience. It’s straightforward to get carried away and find yourself bidding more than you can afford.
It’s always worth avoiding the first few properties these get people’s attention and are almost guaranteed to go way over the asking price. So, stay well clear and leave these ones for the buyers with the deepest pockets.
Don’t be afraid to leave empty-handed. There will always be plenty more auction houses you can attend to. If you are obsessing about buying, you could end up making a wrong decision by having a fear of missing out. But don’t fret there is always more properties and as they say the best things come to those who wait!
Make sure you have written down your highest bid for each property before you even start. Never budge under any circumstances. If you think that your emotions are likely to get the best for you, then it may be worth taking a friend or family member with you. But make sure it’s someone who will not have any emotional attachment either. You could even ask them to bid on your behalf.
- Know what you are going to buy
A property may say that it’s three bedrooms but if one of them has no windows and is too small. If you cannot fit a full bed, it may be unusable and will need to remove walls to create a larger bedroom. This could mean you are, in fact, buying a two-bed property instead of three.
- Remember to take all your documents
If you are the successful bidder, you may have to pay up to 10% on the day. Some auction houses will ask for your payment method available. So, make sure you have the money and no limits to stop you making the payments.
On the day you will be asked to complete a lot of paperwork. So do make sure you have checked the auction house’s catalogue for their full list of document requirements. You do not want to find you have forgotten something that could prevent the sale.
Also, if you are buying a property on someone else’s behalf or with someone else, take their paperwork as well.
- Speak to your mortgage broker before you consider buying
It’s not only cash buyers who attend the auctions some have funded all the purchases with mortgages. In fact, it is becoming a common practice these days, but do make sure you have an excellent mortgage broker.
One easy way of giving the broker the information needed is to video the property as you view it. This way, the broker doesn’t even need to attend, but they will be able to help evaluate the property with you and let you know what it is most likely worth.
If possible, the mortgage broker could visit the property with you and get your mortgage agreed in principle before you even win the auction. You should always agree to an absolute upper limit. Make sure you are never tempted to bid above this price and organise a valuation shortly after a winning bid.
You usually have 28 days to exchange. Don’t forget you will lose your deposit if you are unable to get the mortgage, or if it takes longer than the allotted time.
- Read all the legal terms (LEGAL PACK)
It is surprising the number of people who make bids at auctions who have not even bothered reading the legal pack. It’s crucial to read everything but do begin with the particular conditions sections and read them in detail. This is where shocks can hide. If you are in doubt, consult a solicitor.
The main things to watch out for include outstanding payments as you will end up inheriting these. It’s known that people have inherited a property with over £80,000 worth of debt! Also, if any are any significant works planned (these are listed in section 20 notices). If there are going to be any further buying costs, you need to factor these into your final bid.
- Find a solicitor who knows a lot about auctions
There is a fair amount that needs to happen once you have won the bid all the way through to exchange and completion. You will need a solicitor who can work for you quickly and efficiently and hurry the other side along when required as well. Speak to the auction house and see if you can get any recommendations from them.
Don’t only rely on a solicitor. It is also essential to be aware of the legalities yourself. When you complete give the sale documents to your chosen solicitor as soon as the hammer drops, reply to their questions straightway and return their calls when needed. Also, do the same with your broker. These tips will help guarantee everything stays on track, and when you’re buying a property at auction, everything goes through without any hassles.
DISCLAIMER: These articles are for information only and should not be construed as advice. You should always seek advice prior to taking any action.