Although property auctions were once a popular venue for buyers and investors looking to buy properties for profit, they are now attracting both mainstream buyers and sellers.
Although property auctions can be exciting, they are not for the faint-hearted. You need to be prepared. This article will explain how property auctions work and the pros and cons to buying property at auction.
What is the process of property auctions?
You can search online for your local auction or find properties up for auction via portals like Rightmove and Zoopla.
The majority of property auctions publish their catalogues about a month before the auction. They will also include a guide price. Make an appointment to see the house that you are interested in bidding for. If possible, you can also visit it multiple times.
Auctions of property are fast-moving so make sure you have a mortgage agreement in place, have completed a building survey, and that your Conveyancing Solicitor reviewed the legal packet provided by the seller prior to auction.
Decide on a price limit before you submit a bid. Stick to it. While you might lose money on survey and solicitors, it could still be a small amount compared to the thousands you spend on a property.
You don’t have to be present to bid. Instead, you can bid by phone or proxy. Here you can set your maximum bid in advance. However, it is common to have to pay a 10% deposit.
There are two options to complete an auction if you have a successful bid. Auction houses typically require a 10% deposit immediately after an auction. After that, you have 28 days to complete. You will usually need 56 days to complete the transaction if you pay a non-refundable deposit.
Advantages
Speed – Houses bought at auction are able to be completed in as little as 28 days.
You can get a great deal if you are looking for a “fixer upper”, you will find amazing gems at auction at a phenomenal price.
Transparency – You can see all other bidders in the auction room and there is no pressure to place your bid.
Advantages
Be ready to spend your money – You will need to pay a deposit if you win the auction. After that, you have only a few days to pay the full purchase price.
Surveyors and solicitors have less time – It takes a very short time to arrange surveys and check the legal packs of properties that you are interested in. This puts a lot of pressure and stress on due diligence.
You might be outbid. If someone bids more than you have, you risk losing the money that you spent on surveys and solicitors. Although it can be tempting to bid higher than your budget, once the hammer drops, there is no turning back.
Get in touch with us today to get advice about buying or selling property at auction.
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