Buying property at auction
There are lots of reasons why you may decide to buy property at an auction – including the chance to buy at a good price. Property at auction can be up to 30% cheaper than that bought through a regular sale.
And at a property auction, as soon as the hammer comes down the home is yours. Whilst this makes the buying process much quicker, it means you need to have everything in place beforehand.
Prepare before buying a property auction
Property auctions are most popular with professional property dealers and traders, but that doesn’t mean the ordinary house buyer can’t buy at auction too. However, if you are thinking of buying at auction, you should make sure you know what you’re doing before you arrive.
You can find when there are going to be auctions by reading specialist property magazines and newspapers, as well as asking local estate agents – or looking on the websites of some of the big auction houses such as Savills, Barnard Marcus and Allsops. Before every auction, a catalogue of the properties up for sale will be published. You will usually have between two and four weeks between the publication of an auction catalogue and the sale.
You should treat buying a property at auction the same as any other property purchase – make sure you do all the same checks and preparations. Arrange viewings and, if possible, take a builder or architect with you. Auction properties often need a lot of work doing to them and it’s important you get an idea of how much it’s going to cost.
Compare them with other properties on sale at a local estate agent and make a judgement about what its market value might be once it’s been renovated. And if you’re serious about buying, consult a surveyor or valuer.
You should also get a conveyancer on board to help with the legal process. They will be able to scrutinise the legal information provided by the auction house and spot any conditions of sale that could cost you a lot of money – eg that you have pay the seller’s legal fees. Although conveyancing is much more straightforward with auction properties it’s still a good idea to have professional help.
Although you may be reluctant to pay for a survey or legal help on a property you’re not certain you’ll get, it’s far better to be aware of any problems before you buy.
Arranging a mortgage before auction
On the day of the auction will have to put down a 10% deposit as soon as the hammer comes down, so you need to have instant access to money. You will have a set period of time to pay for the rest of the house – usually 28 days – otherwise you will lose it and your full deposit.
So, if you will need a mortgage to pay for the rest of the property it is a good idea to have a mortgage agreement in principle arranged first. A Which? mortgage adviser will be able to help you find a mortgage suited to your circumstances.
If you’re worried about getting the finance in time, it may be worth thinking about taking out a bridging loan to tie you over until you get the mortgage. A bridging loan normally only takes about 10 days to arrange, quicker than a typical residential mortgage.