Are you considering buying a property at auction? While there are some bargains to be had in houses that offer the opportunity to completely overhaul what was there before, there are some key things to look out for before you start placing your bids.
Here is a checklist to help you make your decision.
Do Your Research
Like any property search, buying at auction involves a lot of research. Narrow down the area in which you would like to buy, then find the nearest auction houses that cover the location you have in mind. Request catalogues so you can see the latest properties that are on the market and look out for
Once you know what properties you like that are for sale, speak to the auctioneer to arrange viewings. Always look around what you might want to bid for before you set foot in the auction house as it is important to avoid any unwanted surprises that could add to the financial outlay on that property.
Also, go to some auctions beforehand so you can get a feel for them. You may pick up some tips about each local auction house while you are there.
Know What You Can Afford
Make sure you have a budget in mind and funding in place. The route you take will depend on if you are paying cash or you need a mortgage.
If you do need a mortgage, as with purchasing through an estate agent, you will need an Agreement in Principal. This will give you your top limit, so you know how high you can bid on the day.
The lender you choose will need to know that you intend to buy at auction as you will have to have paid the balance on the property in full 28 days after the gavel comes down. The lender will conduct a valuation to make sure the property is a secure choice for the loan.
Look Through the Legal Pack
Study the legal packs on the properties you would like to bid for. There may be clauses and planning permission issues that cause problems for any ideas you have for the building. It is worth asking a solicitor to look through these documents as they can be complex, especially if the property is older or unusual.
Commission a Survey
It is worth commissioning a survey. While this is not a legal obligation, it can be useful in the long run. A Homebuyer’s Report will generally include all of the information you need.
You know your top limit, so always have this in mind. The guide price is just that: a guide. Expect for the bidding to go over this amount and factor in how much more you can afford to pay. It is easy to get carried away, particularly when you end up in a bidding battle, so always know when to stop raising your paddle.
Once you have won the bid, get some insurance on the same day. This will protect the building from the moment it is officially yours.