When you think of an auction, you probably imagine a room full of people, all eyes fixed on the auctioneer, and the whole process being very fast-paced and energetic.
Actually, if this is the image that crossed your mind, you’re not far wrong. Property auctions are speedy and exhilarating; and as a result, they can be an intimidating environment for those who aren’t used to them.
If you’re a newbie to buying a house at auction, here’s what you can expect; both before the big day, and during the auction itself.
What to Expect at a Property Auction
Before you attend the auction, it’s likely that you’ll be browsing through the auction house’s catalogue, to see if there are any bargains worthy of your attention.
You can request the catalogue from the auction house (these days, you can usually download it online). Then, your task is to trawl through the pages and start to identify the best property investment opportunities.
If you like the look of a particular property, you’ll need to read the accompanying legal pack, to check it doesn’t come with any major issues. If you’re not familiar with legal documents, we recommend hiring an expert to assist with this.
It’s also a wise idea to view the house in person, to check that there aren’t any serious structural problems, or any issues with the surrounding area. Some buyers do purchase properties ‘blind’ (i.e. without viewing them first), but we’d strongly recommend against doing this.
Find Out the Guide / Reserve Price
Next, you’ll need to check that the prices suit your budget. Each property will have a guide price and probably a reserve price too. The guide price is an estimate of how much the auctioneer believes it’ll sell for. A word of warning, this is sometimes deliberately set low, to attract more bidders.
A reserve price is the lowest amount that the seller will accept for the property. If this price isn’t met, the sale is withdrawn, irrespective of whether you’ve bid on it or not.
Get Your Finances in Order
Buying a house at auction is different to making a purchase via an estate agent. Firstly, you’ll need to pay 10% of the final sale price on the day, with no exceptions. Then you’ll be expected to pay the remainder within 28 days. In short, it’s vitally important to get your finances organised before you start bidding!
You may also have to pay certain fees to the auction house etc.
The Actual Bidding
Bidding can get chaotic at a house auction, so we’d recommend the following strategy:
- Set a budget and stick to it.
- Be aware that the auctioneer will use a variety of tricks to get you to bid higher.
- Be prepared to walk away – other property investment opportunities will arise in the future!
Help with Buying a House at Auction
If you’re keen to learn more about property auctions and the enormous potential they offer, get in touch with The Buy2Let Shop team. We’re experienced property investment agents, and we’re here to help you generate a high ROI, while staying within your budget.
For more information, visit The Buy2Let Shop website today.