Buying a property at auction is something you may never have thought of before. Buying through an estate agent is usually the norm, and this is often recommended for people who want the safety and security of going through the process with a specialist.
But many people buy at auction – especially landlords who are adding to their property portfolios – and there are advantages and disadvantages of doing so, as covered in this blog.
Buying at auction can be a great way to find yourself a bargain, and it can also be very exciting. But you need to go about it in the right way, so here are 10 tips for getting the most from your experience.
1. Go to an Auction Just for the Experience
If you have no experience of property auctions, go along for the first time with no intention of buying. This is a great way to experience what happens and become familiar with the atmosphere and the process.
You might even want to pick out a property to follow without actually bidding on it. Here's a quick guide to the basics of bidding at auction to give you a better idea.
2. Get the Catalogue
After you know which auction you want to go to, get hold of the catalogue and study it in detail. This will include all of the properties for sale, and it is an essential step in the preparation process.
3. Arrange a Viewing
Once you have found a property you like, arrange to view it just like you would if you were buying a property through an estate agent. Go along in person on an open day and get a feel for it. Look out for any potential problems or any renovation work that is needed, which is often common at auction. If you like the property, you could also arrange for a survey to give you extra peace of mind.
4. Research the Property Further
Go beyond just viewing the property. You will also want to find out about the price and work out whether you think the guide price is accurate. Research the area and find out about the other properties for sale nearby. The guide price may be low to tempt in more bidders, so try to work out the real market value and use this to guide your bidding.
5. Prepare Your Finances in Advance
You will need to sort out all of your finances before bidding. You will need a 10% deposit on auction day, and then you usually have up to 28 days or so for the rest.
High-street lenders may not be able to lend you money this quickly, so talk to a specialist advisor with experience of the auction process, and they may be able to point you in the direction of a specialist lender. Or you might want to secure a mortgage in advance.
6. Find Out About All the Fees
There may be many other fees involved, so always find out exactly what you will be paying. Some lenders may provide introductory low rates before raising them after a few months, and then you may have an exit fee when you settle the loan.
You may also have to pay a buyer's fee, auctioneer fee, legal fees, broker fees and more, so always find out in advance.
7. Read Through the Legal Pack
Once you show an interest in a property, you can get a legal pack from the auctioneer, and it may be available online. Make sure you go over this carefully. Are there any legal issues to be aware of? Hire a solicitor to go over it for you to spot any hidden problems.
8. Prepare Your Documents
You will need to prepare all of your documents before the auction, which includes proof of ID, proof of address and your 10% deposit. It is also a good idea to take details of your solicitor to the auction.
9. Arrive Early and Choose a Good Spot
Make sure you get to the auction early and choose a spot where the auctioneer will see you. That way they will know that you are bidding and you won't be hidden away at the back of the room.
10. Stay Calm
Finally, make sure you stay calm during the process. It can get nerve-wracking when you start to actually bid on your chosen property, so keep a cool head and never start bidding beyond the budget you have set yourself.