Buying property at auction is incredibly exciting. The choice available, speed and certainty of sale, transparency of the price paid – plus the chance to bag a bargain are why so many people now choose to buy at auction.
To be successful at auction you need to be prepared and ready to act quickly. It may seem overwhelming to begin with, but with a bit of practice and some homework you will soon be bidding and buying property at auction.
1. Get in early to arrange a viewing
Auction catalogues are released two to three weeks before an auction sale date and viewings are usually arranged on a block basis. Typically there will be four viewings before the property is sold. It is best to get in early – and go back again if you want to.
2. Research the local area
Try and do as much research as possible before the property viewing. Visit the area at different times of the day and night, research local area statistics and check online property websites for comparable property prices. It’s also worth calling local estate agents as they can be a goldmine of information.
3. Have finances in place
If you like the property you need to act quickly. Mortgages can be obtained on many auction properties – even if they do require work – but having a kitchen sink and toilet is crucial to obtaining finance. Any finance should be applied for ahead of the sale date and where possible surveys undertaken.
4. Get all legal paperwork checked before the auction date
Getting the legal paperwork checked ahead of the sale date can save many headaches further down the line. Properties can have legal issues which may affect the value of the property and the ability to raise finance. Many solicitors will check the auction legal pack for a nominal fee prior to bidding and if successful this fee is usually deducted from the final bill.
5. Set a budget for any renovation work required
Cost any works which the property requires and, where possible, try and obtain quotes from tradespeople in advance so you have a clear idea of the budget involved.
6. Calculate the bid price
Once you have an idea of the end value of the property and the cost of any works, you can calculate the bid price. Make sure you include all the hidden costs which can add up such as stamp duty, legal fees, finance costs etc. Try and aim for more uneven bid numbers such as £171,000 rather than £170,000.
On the day of the auction arrive in plenty of time with your photo ID, proof of address and 10 per cent deposit funds – you will need these if you are successful. Make sure there have been no amendments to the property details and get yourself in position to bid.
8. Bidding at auction
There are no right or wrong ways to bid at auction – it is more an art than a science. The key thing is to be seen and/or heard by the auctioneer. Place yourself where you can see the auctioneers’ eyes and where you feel comfortable. Remember it is only the auctioneer who can accept your bids and his decision is final.
Auction fever is a very real phenomenon and people can get carried away. It is important to stick to your upper limit and once it’s been exceeded leave the room so you’re not tempted to bid more.
9. The buying process
Once the hammer has fallen the property is sold and you are committed to buying. You will now pay a 10 per cent deposit, the auctioneer administration fees and exchange contracts.
The sale will usually complete 28 days later. Make sure you tell your solicitor and lender immediately and, if applicable, organise insurance cover. Circle the date in your calendar and ensure everybody is working together to complete on time as any delays will incur financial penalties.
10. Final sale
The beauty of auction is the certainty of sale. There is no gazumping or gazundering – once you have successfully bid - you have bought the property!