Since the housing market took a nosedive and the cost of living soared, the growing number of repossessions and househunters looking for a bargain has seen more and more properties go to auction. Unlike buying though an estate agent, property auctions can be a tricky business, but if you're willing to take the plunge, here's what you need to know.
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Where do I start?
The first step is to find an auction local to the area in which you want to buy. Property papers and magazines are a good place to start, while local estate agents may be able to point you in the right direction. Alternatively, check online for any upcoming sales at www.ukauctionlist.com.
Once you've found a relevant sale, contact the auction house and request the catalogue. These are often printed weeks in advance, which is just as well, because you'll need that time to study it thoroughly. Carefully check the conditions associated with any properties you have your eye on, and consult a surveyor or valuer to get a professional opinion on the homes you are interest in.
Viewing and research
Though it's not mandatory, bidding on a property at auction without having seen it is a big risk. It's always best to arrange a viewing so that you know what you're letting yourself in for. Even properties that appear to be in reasonable condition can hold hidden flaws, so it's an idea to take a builder along to help you check the place out and advise on the costs of repair if necessary.
Thorough research is also important. By comparing the estimated price and condition of the house with others in the same area, you'll get a good idea of how much it's truly worth, as auction starting prices are often set low to encourage bidding. In addition, the usual property surveys and land searches need to be carried out as with more conventional methods of buying. A legal pack should be available from the auctioneers so make sure your solicitor checks through the details and makes you aware of any potential pitfalls or extra expenses.
Unless you are a cash buyer, you'll need to arrange a mortgage. It's advisable to start this process well in advance as getting a mortgage when you buy at auction can take longer, due to the unknown cost factor. Come auction day, you will need to be in a position to hand over a 10 per cent deposit to the auction house (as well as the deposit you'll need to secure the mortgage itself), and the remaining funds will be required within 28 days or you'll lose that deposit sum, so don't delay.
If you're new to property auctions, it's a good idea to go along and attend one before you try and buy, so that you are aware of how it all works. Most importantly of all, set your budget and do not waver. Bidding can be both nerve-wracking and exciting so don't let your rapid heartrate get the better of you. It is also worth noting that if your desired property doesn't meet its reserve, there could still be a chance to cut a deal. Auctioneers sometimes act as agents, negotiating an agreed price between buyers and vendors even if the property doesn't sell during bidding, so it's definitely worth checking out.
Lastly, do remember that once that hammer falls, it is a legally binding deal - but with thorough research, proper preparation and a little bit of luck, you might just bag a property bargain.
Have you bought a property at auction? What's your advice for newcomers? Leave your comments below...