Absolutely not, and with the right planning and advice the average homebuyer can snap up a bargain. However, it’s important you are prepared for the ins and outs of the auction process and understand the financial commitment you’re taking on the moment that gavel comes down. Here’s how to get started.
What to do before the auction?
There are plenty of auction houses around, but it’s vital to find one that has a solid reputation, such as Auction House East Anglia. After all, you will need to trust them with large amounts of cash after you successfully bid on a property. You can request a copy of their latest catalogue to see the kinds of properties that are up for auction and check their website to get an idea of how the process works. Many property auction houses will also have information about past auctions, such as the guide prices of properties, and their eventual selling prices. This is great for helping you research the market.
How to read the legal pack?
Most reputable auction houses will provide you with the legal pack for a property when you express an interest. This information goes deeper than the catalogue listing, and should include such things as:
- Title deeds.
- Local authority and environmental searches.
- Leasehold information.
- A list of fixtures and fittings.
- Seller’s information.
If you’re interested in making a bid on a property, it’s important to get an expert to check the legal pack. They will be able to tell you if there is anything missing, or there are issues, clauses or loopholes that might lead to expenses or problems down the line. The Attwells team offer a fixed fee, swift turnaround service that will establish whether your legal pack is hiding any unpleasant or costly problems.
Arrange a viewing and get a survey. Just like when buying a house through a traditional estate agent, you can view an auction property as many times as you want. Depending on the condition of the building, and your plans for it, you may wish to bring a specialist along, such as a surveyor, builder or architect, to provide you with an expert opinion on what might be required to fix up the property. Auction properties may be derelict or abandoned, and knowing the costs involved will help you decide whether to bid or not.
Before you bid, make sure your funds are ready to go. Auctions aren’t just for cash buyers, although having the funds ready to go makes the process less fraught. If you’re going to get a mortgage on an auction property, make sure the mortgage provider can process your application in the timeframe required. Because once the hammer falls on your successful bid, things will move quickly. Your deposit money will be due there and then, and depending on the wording of the contract, you will likely be legally bound to pay the remaining balance within 28 days. You can’t ‘pull out’ at this point, and failure to pay on time will incur serious costs. You could lose your deposit, and still be liable for interest payments, reselling costs and other penalties.
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Remember, the guide price is designed to attract bids. Don’t make your financial calculations based on the guide price alone, as this could be pushed up during the bidding process. When you consider the maximum amount you want to bid, ensure you have the deposit money ready to transfer on the day, and be careful not to get caught up in the moment and increase your bid beyond what you know you can finance at that point.
Considering bidding on a property? Call Tanya Warnes on 01473 239857 to get your legal pack reviewed.