Auctions for property have been an important venue for investors and buyers searching for properties to sell and make a profit. But they are now more popular with mainstream buyers as well as sellers.
Property auctions are fun, but they aren’t for the weak-hearted. So be prepared. We will take a look at the process of property auctions and discuss the pros and con’s of buying a property at an auction.
How does property auctions work?
Search online to find your local property auction, or browse auctions through portals like Rightmove or Zoopla.
Property auctions near me usually release their catalogs around one month before auction. The guide price will be included. You can make an appointment to visit the property if you find one you like and you want to bid.
Property auctions are very fast. Before you bid, ensure you have a mortgage agreement, a building survey and that the Conveyancing solicitor has reviewed the legal package provided by the seller.
Be clear about your price limit before making a bid. Although you might lose the money spent on solicitors and surveys, this is still a significant amount of money compared with spending thousands more on a property.
You don’t need to be present in the room to make a bid. You can also bid over the telephone or by proxy. This allows you to set your maximum bidding in advance. However you will often have to deposit 10% of your maximum bid.
You have two options to exchange your bids and complete the auction. Traditional auction houses require a 10% deposit right after the auction. You have then 28 days to complete. The property will often require a 10% deposit. After that, you have 56 days to complete.
Advantages
Speed – A house bought at auction is faster than traditional buying, which can take up to 28 days.
Find a great deal on a fixer upper – There are some amazing deals at auction for a fixed price.
Transparency: On auction day, you can view all bidders in a room without any pressure to make your offer first.
Disadvantages
Prepare your cash – In order to win an auction, you will have to pay a deposit and you only have a certain amount of time to pay the entire purchase price.
Fewer time for solicitors and surveyors – You have a short window to arrange surveys or to review the legal pack of the properties of your interest. This places a lot more pressure on diligence.
You could be outbid. If someone offers more than your budget, you may lose all the money you’ve spent on surveyors and solicitors. You may be tempted to offer more than you have budgeted, but once the hammer hits, there’s no stopping!
Contact us today for advice about selling or buying at auction or if you have any questions.
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