Are you planning to own a new house? Why not think about buying at an auction? Auctions are a great way to secure a property at bargain prices without following a lengthy and tedious buying process. There are no negotiations, no last minute deal fail if the seller finds a better offer and no driving around to view endless houses. With easy auction process, you just need to go through the auction catalogue, find a home that interests you, do some research, prepare finances and show up on the auction day.
Every year thousands of properties are being sold at auction in the UK, and most of them are below market value, meaning there are ample bargains to snap up. However, buying property at auction requires careful planning. You cannot change your mind later if you find something bad about the home. Hence, it is advisable that you do thorough research before going to the auction.
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What are Auction Properties?
People in the UK often take out mortgages from bank by putting their properties as a collateral. In the unlikely event that the borrower is not able to repay the loan, the lender is authorised to sell the property in order to compensate for the loan amount. Such properties are put on sale in the auction where bidders can bid to purchase them. Such properties are put 20% to 30% lesser than the market value to attract buyers.
Why Buy Properties At Auction?
Auctions may help you find unusual properties at bargain prices that others didn’t realise its potential. Over the last few years, auctions have become increasingly popular among home buyers who are looking to avoid the traditional way of purchasing a home. As soon as the hammer falls, the deal is agreed and thereafter there is no risk of losing the property. Moreover, you get to see what others bid and there is a no chance the cost of the property will rise and there is nothing that they can hide from you.
If you are considering to buy a property at auction, it is important that you take a look through some essential points mentioned below, so you can avoid any pitfalls and buy your dream home in the safest way.
#1 Research about auction properties in your interested area
First of all, search for the properties which are to be auctioned in the area you want to buy. Generally, auctioneers advertise action properties in the newspaper and websites, so make sure you keep an eye on all those places. Contact auctioneers in your preferred area and ask them for the latest auction catalogue and request them inform you about any upcoming auctions. It is highly recommended that you choose only regulated auctioneers in order to ensure you don’t end up buying illegal property.
#2 Visit the property for physical inspection
Once you spot the property of your choice, contact the auctioneer to arrange a viewing. When you visit the property, ensure you thoroughly inspect it and its surrounding neighbourhood. See whether the property is under bank’s possession or defaulter continues to live in the house. Along with that, make sure you check the property’s condition and inquire about for how long the property has been abandoned. Consider taking a builder or architect with you to find out what tasks are required to be done and how much it is likely to cost. If you have any concerns regarding the property, don’t hesitate to ask the auctioneer.
#3 Set your budget and prepare your finances
If you are planning to buy a property at auction, you should be ready with a handsome amount of cash in hand. Think about the maximum cost you can afford for the property. Although auction properties are quite cheaper, some renovations are usually required. Furthermore, you are required to pay administration fees, search fees and so on. Therefore, it is essential that you take all those costs into account and inquire about options to arrange finance in the earliest possible way. You can also consider taking Bridging loans in the UK if you don’t have sufficient funds available at the moment. Failing to pay the money on time will not only result in losing the property, but also the advance payment that you have made.
#4 Submit the bidding form and read the fine print
The bidding form is the document that needs to be submitted in order to participate in the auction. Mention the price you are willing to pay for the property. Before submitting the form, ensure you ready all the terms and conditions of the auction. Make yourself familiar with the terms of the sale, payment terms, necessary paperwork and other crucial details so you don’t encounter unexpected surprises on the auction day. You may consult legal adviser to study the small print on your behalf and to ensure it is legitimate.
#5 Going to the auction
Once the procedure is completed, now you should prepare yourself for the auction day. It is exciting for some people while others may find it frightening. So, make sure you stay calm and cool on the day. Know how much you can afford and don’t go overboard just to realise you cannot afford the property. Keep necessary documents, such as ID proofs and the proof that you can afford a 10% deposit handy with you. When the bidding starts, make sure you say your bid loud and clear. If you win the bid, you will be required to pay the deposit and sign the contract. From that moment, you will be bound by the terms of the sale of the property.
Once you pay off 100% amount of the property, you will be provided with sale certificate that stands as a proof that the transaction between the buyer and the seller has completed. Thus, the process of buying a property at auction may seem a lengthy and difficult, but if you successfully complete the process, you will be able to purchase a property at much lower value.