If you are thinking of buying a house in auction, you could be about to embark on an extremely rewarding way of finding a new home and, at the same time, potentially get yourself a bargain.
But buying a house at an auction is not for the fainthearted. As soon as the auctioneer’s gavel comes down, you’re committed – there is no going back.
If buying a house in auction is a route you are considering, here is our simple guide to help you get it right.
Step one is to search for property auctioneers and estate agents involved in property auctions and ask to be added to their database, so you are alerted as soon as possible to upcoming auctions. You could also look at some of the websites that list auctions around the country, such as Property Auction Action. A catalogue should be available a few weeks before each auction, which will carry information such as guide prices and conditions of sale.
There will be legal documents related to each lot which you should familiarise yourself with and consult your conveyancer or property lawyer about. The content of such documents will have a strong impact on how much you are prepared to bid – or whether you bid at all.
You should arrange for a survey to be carried out on a property you are thinking of bidding for. Again, your conveyancer will help arrange this. If you don’t want to pay for a survey, you could ask a trusted builder to accompany you to a viewing, to help give you some idea of the extent of any modernisation or repairs that are necessary but this is unlikely to reveal any defects in the property that could affect your decision to buy.
Research the local market so you have a firm idea of the prices that properties are selling for. It is all too tempting to get carried away at an auction, and you don’t want to end up paying over the odds.
Ahead of the auction, check what ID you may need and how a deposit needs to be paid, should you be successful in your bidding. Contracts are exchanged immediately, and you will also be expected to pay a deposit – which is usually 10% of the purchase price – as well as the fee to the auction house.
A guide price is just that – a guide; properties often go for much more. There will be a reserve price, so if a property doesn’t end up selling, because it’s not reached the reserve, you might consider negotiating with the vendor, via the auction house.
Buying a house in auction has its potential pitfalls but also its advantages. If you have a property in mind, or are considering this route, please do get in touch with our conveyancing team to chat it through before you commit to buying something that you may regret later.