Buying a house at auction seems like the perfect way to get a bargain and these days it is easier than ever to do just that. Unfortunately with banks foreclosing on mortgages in record numbers and many people finding they can no longer afford their property, people are turning to auctions to get the best possible price for their property in the shortest possible time.
For the most part an auction property will sell below the usual price in the area for that type of property. But there is a reason for this. Sometimes it may simply be un-mortgageable due to the type of construction or condition. It might be in need of modernisation or renovation and won't sell on the open market. Or perhaps it has been repossessed by the bank who want to sell quickly or it may have been part of an inheritance. Auction properties may also have hidden disasters lurking within them such as dry rot, subsidence or worse. All these things can encourage the owner to place them up for auction. The key is to do your homework and find out why the property is going so cheap.
- A simple online search will come up with companies in your chosen area which will be conducting auctions. It is always advisable to attend an auction prior to the one you hope to bid on. Get a feel for the rules and atmosphere while improving your confidence.
- View any properties you are interested in. Most will have set viewing days but arrangements with the agent can be made as well.
- If you have one or two which you have your heart set on then you must get a survey done prior to the auction. You may feel comfortable with a quick survey, but older properties should have a full structural survey to ascertain the cost of any repairs.
- Now is the time to get finances in order. Speak to a solicitor regarding the deeds and title of the house you want to bid on and talk to the bank regarding your mortgage. The deal should be complete within 28 days of your successful bid so the mortgage needs to be available and ready to go.
- Read the legal pack which goes with the property in detail. Don't leave anything to chance. This will tell you if there are any covenants or problems with the property. But having your own solicitor check things over is a good move too.
- If you win your bid you will be expected to place a 10% deposit and this will need to be as a bankers cheque in most cases. A personal cheque is rarely accepted. This means you need to estimate your winning bid and make out the cheque before you attend. Most auction houses will accept a small amount in a personal cheque form to make up any shortfall. This deposit is non-refundable if you fail to pay the difference.
- Work out how much you are willing to spend on the house. This will be different for someone who want to make money from the property to someone who wishes to live in it. But above all set an upper limit and stick to it. Bear in mind any fees and stamp duty. Be forceful and confident, but don't let the auctioneer talk you into making a bid you are not comfortable with. Walk away if necessary or send a friend to bid on your behalf if you don't trust yourself.
- Auctioneers will accept offers on properties prior to the auction and this may be accepted if it is high enough.
- If a property remains unsold after the auction it may come up in a post auction sale. This is where the real bargains are to be had. But bear in mind that it may not have sold for a very good reason.