Property auctions help to minimise the chances of complications in the homebuying process. However, there are still measures you will need to take in order to be well-prepared before, during and after the big day.
Having a good understanding of the current market, knowing what type of property you desire, and making sure you have your finances sorted could make all the difference at auction – virtual or otherwise.
Below, we present five tips on bagging a bargain at auction.
Do your research
It’s unwise to attend an auction and start bidding blindly. First, you will need to get a feel for the market and familiarise yourself with property types in your desired location.
To get a better understanding of how auctions work, consider watching other auctions online or, if you’re able to, visiting an auction yourself and speak to an auctioneer to work out what you need to know.
Requesting a catalogue will also help. These are usually published three weeks in advance and include a list of properties up for sale, as well as detailed information and guide prices for each lot.
Get your finances in check
Once the gavel goes down you are in a legally binding contract and are liable for the full amount of the winning bid.
You must ensure that you have cash cleared for the 10% deposit and that you are able to pay within the set timeframe, or you risk losing money.
You will also need to get an agreement in principle sorted, as well as have a full valuation carried out by a lender, if you’ll be purchasing with a mortgage.
Read the legal pack
Many people bid without reading the legal pack first, but it’s good practice to take a look beforehand.
These are usually provided by the auctioneer, detailing the title deeds, local authority and environmental searches, and a seller’s information form – plus any relevant leasehold information.
Ensure that you read the special conditions carefully, as this is where the small print will lie. You will also need to watch out for any outstanding bills you may inherit, if any major works are planned and any extra buying costs.
Visit the property
Like any property purchase, elaborate research and legal advice are essential before you can bid on a lot. For this, you will need to appoint a solicitor that is familiar with auctions and will act for you promptly and efficiently.
The best way to get a clear picture of a home is to view it. Consider taking a professional with you and getting a survey done; a basic survey will show any major structural issues and can cost between £300-£500. (In the present climate, you need to ensure in-person viewings are allowed in the area you’re looking to purchase in and also ensure that you and anyone you take with you adheres to the current Covid-19 guidelines on physical viewings).
Be ready on auction day
At present, all property auctions are taking place online and remotely, but the process of being ready for an auction is much the same. You need your strategy and finances to be in place, and you need to ensure you fully understand the bidding process and your legal position once the gavel falls.
If and when in-person auctions return, unlikely to be until 2021 at the earliest on present trends, there are a number of things you need to bear in mind.
On the day of the auction, make sure you arrive early and pick up an ‘addendum sheet’ on your way in. This will include any amendments and additional information to the properties listed in the auction.
Ensure that you have everything you need, especially two forms of identification (such as a passport or utility bill) and proof that you can afford the 10% deposit.
Lastly, don’t despair if you don’t reach the reserve price. If this happens the seller might decide to go for the highest bid once the auction is over – so stick around and approach them at the end.
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