Property Auctions Explained
By P Green
One of the most common methods used by property investors to get a bargain house is property auctions.
You can't beat a lively auction as an excellent source of quick cheap property. For investors it's essential. But auctions are also good for ordinary people who are prepared to do a bit of work and take a risk in finding a new place to live.
You have to ask yourself why houses are in property auctions in the first place. Sometimes there are entirely innocent reasons, such as the disposal of an estate after a death. But of course you also get houses up for sale that will need a lot of work done to them before they can be lived in. This may be great for investors but not for you – so go into the auction with your eyes open.
If you've never been to property auctions before, the best first step is to go to a couple to get an idea what happens. It can be pretty terrifying watching people bid hundreds of thousands of pounds, and if you plan to do it yourself one day you will need to be comfortable with the environment.
While sampling some auctions, you should contact auction houses to ask for their catalogue. Most of them hold regular sales and print the catalogues several weeks before, giving you plenty of time to pore through and find properties you are interested in. Many firms now make their catalogues available on the internet.
When you have found some that interest you, arrange viewings using the details in the catalogues.
Like what you see? Then get researching. Because houses in property auctions are likely to be empty, you will need to find out unlisted details about the house and area yourself. Don't be afraid to knock on a few doors to ask the
neighbors what it's like to live there. And ask them why the house is empty and what's happened to it in the last few years.
You should also consult property agents who will advise you about typical property prices in the area.
If you're serious about the house, you should now pay for information. Carry out the usual property and land searches. A friendly solicitor or licensed conveyancer will make your life easier if they understand you are trying to remove as much risk as possible from the auction process.
Now you should get ready for the property auctions themselves. Re-read the catalogues of the sales you are interested in, and pay particular attention to the terms and conditions and any small print. It would be very sensible to get professional advice from your solicitor.
If you are successful in your bid for the house, you will need to pay an immediate 10 per cent deposit, so you should have that ready. Typically the remaining 90% of the purchase price is due within a fixed number of days of the sale – 21 or 28 are usual. So make sure you have a mortgage offer confirmed. Unlike the normal way of buying a house, you won't be able to add on a week here or there if your finances hit a small glitch.
Finally, you are ready to head off to the property auctions and snag yourself a bargain. On the day itself arrive at the auction house in plenty of time, and try to stay calm. Set a clear budget for your property and try hard to stick to it. Many people have become carried away at auction by listening to their heart rather than their brain. And that's cost them a lot of money!
If you win the property you will have a binding commitment to buy it and will probably have to sign paperwork on the spot. The last thing you want is to have to quickly arrange another £10,000 of debt because you got bid happy.
About the Author: Further information about property auctions can be found at the Property Today website