Purchasing a property at auction is growing in popularity and there’s a wider choice on offer. With a speedy home-buying process and the chance to bag a property bargain, it’s not hard to see why. Auctions can be a great way to buy a property, but there are also some risks involved.
Buyers can have huge success with auction properties. But, without proper planning, it could potentially become a nightmare, so it’s important to be prepared. Here are some of the advantages and disadvantages of buying a property at auction.
Because buying at auction is becoming more common, bidding is also becoming more competitive, so it’s important to know how the auction process works.
Here are some of the basics:
Step 1 – Get all the information
First and foremost, get all the information you need about the properties that are available by contacting the auction house. The listings are usually released a few weeks before an auction, including a guide price. There might also be a reserve price, which is the minimum the seller would be willing to accept, but this information is normally confidential.
Next, make sure you register with the auction house, which is normally done online by filling in some or your personal details. Before bidding on a property, you should arrange a viewing and get a property survey done, as the surveyor can check if there are any serious structural issues or other repairs needed. You should also carefully read through the legal pack, as this will contain some of the conditions of the sale and other important information.
2 – Decide what you’re willing to spend
After looking at your chosen property, you need to decide what your price limit is. Consider what you can realistically afford and do some research to find out how much similar properties have sold for in the area. It can also be worth getting an independent valuation carried out.
3 – Go through the auction process
The next step is to go to the auction and bid on your chosen property. On the day, make sure you show up early and take all the paperwork that the auction house requires. This varies, but normally includes photo ID, proof of address, and proof of funds. As well as bidding in person, most auction houses now allow remote bidding, either online or by proxy.
During the bidding process, always listen out for any last-minute changes to the listing and if you do bid, make sure your bids are clear so they can be easily identified. Lastly, try not to get carried away on the day when you’re bidding on the property. Instead, always stick to your budget so you don’t end up paying more than you can actually afford.
Here are some of the main advantages of buying a property at auction:
Although there are benefits to buying a property at auction, there are also some downsides:
If you’re considering buying a property at auction, it’s important to be aware of the risks so you can take steps to protect yourself. For example, there can sometimes be hidden fees and charges, so you should check this before the auction so you can adjust your budget.
Another thing to consider is that the house could have a multitude of different problems. As auction properties are more likely to be repossessions, this means the owner couldn’t afford their mortgage or taxes, and could also be that routine maintenance and repairs weren’t done.
To deal with this, make sure you get a survey carried out on the property and get an estimate for the costs so you can ensure that the repairs are affordable and worthwhile. You should also seek legal advice to check for any ongoing disputes or issues with the property.
Lastly, buying a property at auction requires a lot of cash, usually immediately. Make sure you check in advance what the rules are when it comes to financing, as different auction houses have different requirements and the regulations vary between countries and regions.
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