Seven Tips on Buying a Property at Auction

Posted by Jude Buttle on Wednesday, October 01, 2008

Finding a property at a bargain price is proving to be harder than ever in the current climate of collateral concern. But the thrilling atmosphere of purchasing at auction is still an option. We look at ways of making the whole experience a little less nerve-racking. 

 

An Arena of Property Activity

Auctions are recognised as one of the best places to find a bargain buy, as well as providing a quick, secure and straightforward transaction process, with minimum fuss and in a completely transparent environment that is ultimately decided by the drop of a hammer.

So, once you have achieved the first step of deciding to actually purchase a property at an auction, the next stage - as it is whenever you attempt to purchase property - is to get prepared.

1. State of Mind

No matter how calm a person you may think you are, buying property at auction can be daunting as well as exciting. It's easy to get caught up in the moment and feel overwhelmed, so the last thing you want to do is to panic and end up bidding too high for something and exceeding your budget. So, it's always advisable to have a maximum amount in mind before you go to the auction.

It is also recommended that you attend at least one auction before you attempt to purchase, allowing you to soak up the atmosphere and to familiarise yourself with how the whole thing works.

2. Property View

Once you're comfortable with the auction environment and you have chosen the auction that you wish to attend, the next essential thing to do is to request a catalogue to view the properties available and to then arrange with the auctioneer to see the properties you are interested in.

The auctioneers will have allotted times for each property. Although bidding and buying a property you've never seen before may sound exciting, the chances are it will prove costly one way or the other. Remember, there's no point purchasing a house at a knock-down price if it needs knocking down.

3. Researching the Property

Make sure that you do your research thoroughly on the property and compare its price and condition to similar properties in the area that might be on sale with local estate agents. You will very often find that the guide price of auction properties are set relatively low in order to entice bidders, so have in your mind what you think the true market value of the property is, then bid accordingly.

4. Legal Matters

There is normally a legal pack available to read from the auctioneers for the property that you are interested in. It is essential that you digest this thoroughly and if you're not sure about anything, instruct a solicitor to go over it, as there may be more issues of concern with an auction property than that of one on the open market.

5. Finances in Place

The completion period for auction properties is 28 days, so it is vital that you have your finances set up before hand, whether it's making sure you have the cash available or a mortgage set up in principle. And you will always require a 10 per cent deposit of the property price with you on the auction day. It's not unusual for buyers to lose their deposit because they couldn't come up with the rest of the balance.

6. Auction Day

As well as having your 10 per cent deposit on the day, make sure you also have identification documents.

Auctions can be crowded affairs, so get there early if you want a seat. When the time comes to bid, make sure that you can be seen by the auctioneer and that he is aware of when you're actually bidding and not scratching your nose.

7. Bide your Time while Bidding

Finally, what the whole build up comes down to, bidding for the property of your choice.

Bidding at auction is a strange sensation; it's exhilarating and extremely daunting, especially as the pressure mounts and you are bidding for something that is popular and a number of other bidders get involved.

You have to stay as calm as possible, think clearly and bide your time while bidding. Remember to try not to exceed the maximum figure that you have set yourself, as it can be very tempting to go over budget, particularly if you've invested a lot of time and effort prior to auction. A good tip to avoid this is to take someone with you who will help keep you in check.

If you are bidding on a property and it fails to meet its reserve price, this doesn't necessarily mean that this is the end of the matter. The auctioneers can still act as agents and are able to negotiate between yourselves and the vendors after the auction.

Likewise, it is sometimes possible for a deal to be tied up prior to auction, so it may be worthwhile checking this possibility out with the auctioneers beforehand.

That Fine Feeling of Victory

One of the best feelings you can have is when the gavel goes down and you have bought a property at auction. The feeling of getting into a bidding war and winning is euphoric. Knowing that you have just obtained a property and that it is a legally binding deal is extremely satisfying, especially if you managed to end up with a bargain.

 

Search for Auction Property

If you're interested in buying auction property, then start by looking at our webpage for auctioned properties for sale at forthcoming events. http://auctions.themovechannel.com/

Photo by KeithBurtis

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