Purchasing a property at auction: The essential advice
Purchasing a property at auction isn’t the most common way of doing things, but it can be one of the most affordable, which is why more and more people are considering it as a means to getting on the property ladder.
If you’re one of them, here is some essential advice to bear in mind:
You need to prepare for auction
You can, of course, just rock up to an auction for the first time ever and start bidding on the properties that take your fancy, but it probably isn’t a good idea to do that. You see, auctions cause some weird reactions in people; for some people, they are exciting events which cause them to act impulsively in a way that they wouldn’t usually, and for others they can be deeply stressful and pressurising. Both of these things can cause problems when it comes to handing over large sums of money for a property. So, if you want to get it right first time, go to a few auctions just to soak up the atmosphere, research the properties you’re interested in before you head out and get your maximum price straight before you attend. These things will really help you to get the best deal possible.
Pay attention to the auctioneer
On your pre-bidding visits to the auction house, it’s a really goods idea to identify the auctioneer who is likely to be in charge of the proceedings when you go there for the real thing and focus intently on him throughout. Why? Because you can get to know his techniques and tells, which will help you to bid at the right time and not be fooled into overbidding should that be an issue. The more times you can see him in action, the better able you’ll be to fend off any pressurising tactics, and that means you’ll be able to get your dream home for a much better price.
Consider having someone else bid for you
If you think you might be an impulsive/nervous bidder, it’s good to know that you can authorise a third-party to bid on your behalf. If you do this, you will need to give them strict instructions on which properties to bid on and how much you are willing to pay and ensure that you trust them enough to abode by your wishes, but it can be a good way to keep your own emotions in check.
Don’t make a deal before auction
It is often possible to make a deal on the sale of a house before auction, but this is rarely a good idea because auction sale prices are typically lower than any deal that will be struck, and auction pre-sales are usually only carried out when there is little interest in a property – usually for very good reason. Obviously, that isn’t always the case, and if you really want to own a certain property, you’ll have to weigh up the pros and cons, but as a general rule, wait for the auction and buy by bidding.
Bidding is unconditional
When you bid for a house at a property auction, you are making an unconditional agreement to purchase that property – there is no going back. If you think you can change your mind, you will be in for a shock.
Get pre-approval for your mortgage
Since bidding for a property at auction is unconditional, it is important that you get pre-approval for your mortgage before you bid. If you don’t do that and you are the winning bidder, you could end up obliged to buy a property, only to be turned down by the banks and unable to do so – that is not a good position to be in.
Have the property inspected
Where possible, you should definitely hire a company like SPI Property Inspections to inspect the home you’re interested in buying, ensuring that there are no major structural problems, etc., so that you know what you’re buying into and you don’t end up purchasing a home that has dry rot, subsidence or anything else that could be extremely expensive to put right.
Research the area
You should always research the area that you will be buying into as thoroughly as you research the state of the property you plan to bid on because there’s not much point buying your dream home if it’s in a neighbourhood that you hate where crime is high, or there are few amenities that would be useful to you, for example.
When you’re researching the neighbourhood, it would be a good idea to see how much other houses have sold for in the area. This will give you an idea of what your property could be worth once you’ve renovated it, so you can work out how much it’s worth bidding to secure it and when you’d be better off cutting your losses.
Don’t give too much away
Experienced auctioneers are very good at getting information out of buyers in regards to how much they’re willing to pay for various properties, which properties they’re interested in, and a whole host of other things that would work against you and push up the price you have to pay in the end. So, it is really best to stay as tight-lipped about your situation as you possibly can.
Hire a solicitor
You absolutely need to hire a solicitor to check the contract and arrange for any needed amendments to be made when you purchase a property at auction. In this respect, it is no different from buying a house via more traditional means, and it will help to protect you should anything go wrong with the sale. You need to be protected, so don’t skip this step.
If you follow the advice given above and you take your time – not rushing into anything – there is no reason why you should not be able to find a great house at auction. Pay a fair price for it and have lots of fun doing it up to your own standards. I wish you the best of luck.
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