November 28th, 2013.
Buying at Auction: Your Complete Guide
Buying a property at auction is a great way to secure a terrific deal. However, if you’ve never been to an auction before you may feel like you’re being rushed into a sale or are being bullied into a higher price. Here’s our complete guide to buying at auction:
Know What You’re in for
Before you head to an auction to buy, it will be worthwhile attending one or two just to understand the general process. Your first time at an auction will be a blur of numbers, calls and the thunder of the auction hammer sealing a sale. Trying to buy while taking in all the sounds and sights of the auction is likely to be over whelming.
Know What You’re Going For
Get a list of the auction’s catalogue and find the property you actually want to buy. While it may sound exciting simply turning up and bidding with no knowledge of the building you could end up with a money drain. Being prepared will make a huge difference – find out what’s being auctioned and then go and view the properties you’re interested in.
View Before You Buy
Seeing the property is really important at an auction as you need to be aware of every fault that it may have. Often auction properties are there because they are in need of renovation and repair, so it may be worth taking a builder or architect along with you to figure out how much it’ll cost to get up and running.
Time is of the essence here, as there normally isn’t much time between the catalogue being released and the auction taking place.
Do Your Research
Before you turn up and start bidding on the house, try to find out how much similar properties in the area are going for. This will give you a good idea of how much the property is actually worth and will stop you from paying over the odds.
Most auction houses will start the listing price very low in order to entice bidders, your aim is to snatch it up at these low prices. However, you may enter a bidding war, in which case knowing the price of other properties will help you know when to cut your losses.
Arranging Your Finances
Auctions are very fast paced which means you’ll need to arrange your finances beforehand; this can be done by organising a mortgage or if you’re short on time, organise bridging finance instead. Often bridging is the best solution, as it is much faster than a typical mortgage, providing you with the finance you need in a matter of days rather than weeks.
You will need to have a 10% deposit with you on the day of the auction and will have 28 days to come up with the rest of the money. Failure to provide the rest of the payment will result in a default, losing your deposit and the property.
At the Auction
Keep your cool; it can be far too easy to be caught up in the flow of the auction – which could cost you a fortune if you’re not careful. Bid sensibly with a cut-off figure in your head and stick to it! Going over budget might be tempting but it won’t be worth it in the long run.
Don’t worry if you didn’t hit the reserve price, the auctioneers can act as agents between you and the vendors allowing you to agree a price at the auction lots. This is an excellent way to grab yourself a bargain as many vendors set a higher reserve price as they don’t want to let it go too low, but may be negotiable after the auction.
By using all these tips you can grab yourself a fantastic bargain at auction and stop yourself getting carried away and overspending. Good luck at your next auction!