Tips For Buying Property At Auction
You can pick up a bargain when you buy property at auction, but it pays to know exactly what you are doing.
Follow these top tips for buying success:
- Do a dummy run Visit a property auction or two with no intention of buying that day. This will familiarise you with the process and make it less daunting
- Take an expert If you know someone who has bought at auction before, ask them to accompany you when you attend a property sale for real
- Check out the property Always visit the property/ies you intend to bid for beforehand rather than relying on a catalogue description, as you would if you were buying via an estate agent
- Take a builder If the property is older, unoccupied and/or neglected, ask a trustworthy builder to visit the property with you to give you some idea of how much work it might need and what that might cost you
- Commission a survey You must have a survey of the property carried out in advance of the auction, even though you will lose the survey fee if your bid is not successful. A rudimentary lender’s valuation may not suffice, particularly if the property is old or has been unoccupied for a while
- Stick to your budget It is easy to get carried away in the auction room and bid more than you had planned, particularly if you end up in a bidding war. Set an ideal price and a maximum price you will go to in your head, and stick to it
- Sort out your mortgage Get a mortgage arranged before you go to the auction. That will determine your budget and ensure that you will be ready to complete on the deal within the maximum 28 days allowed. You are legally bound to buy any property you have successfully bid for at auction, so make sure you have the finance in place
- Have the deposit on hand You are also legally obliged to stump up 10% of the property’s sale price on the day, so make sure you have the funds available. Take your chequebook and two forms of ID.
- Allow for extra costs As well as paying for the survey upfront plus any arrangement fees for the mortgage which may or may not be payable before completion, you may have to fork out a ‘buyer’s fee’ of anything from around £100 to £500, so check with the auction house in advance. And don’t forget to budget for other costs, such as Stamp Duty and buildings insurance
- Strike a deal If the lot you want has not attracted any interest from others and remains unsold at the end of the auction, you may be able to do a deal with the vendor afterwards. This became common when the property market flattened in 2008, but is less likely to happen these days.
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