Rogers & Norton News
Buying a property at auction can be both exciting and potentially quite profitable. It avoids all of the lengthy purchasing procedures that you usually have to endure and stops the risk of everything falling through at the 11th hour. At an auction, as soon as that hammer falls, that’s it – the property is yours. But it isn’t to be undertaken lightly and it pays to do plenty of preparation.
Finding the right property
Once you’ve researched the companies in your area that conduct auctions and found the one you want to deal with, get hold of its catalogue and spend time studying it. People have been known to turn up at auctions with no knowledge of the catalogue list and then bid on properties on the spur of the moment. This may sound like an exciting thing to do and you might occasionally get lucky, but it is always better to be prepared.
Once you’ve identified the properties that you are interested in, contact the auctioneers and arrange a viewing. As when buying any property, it is best to have more than one viewing, as you need to be aware of every facet of the property if you are considering bidding. Very often, auction properties are in a poor state, so it is advisable to take a builder or an architect with you to find out what can be done to the property, and how much it is likely to cost.
It is prudent to remember though, that time really is of the essence. There is usually four weeks between the publication of the auction catalogue and the auction, so you have to act fast.
Research the property
Make sure that you do your research thoroughly, and compare the price and condition of the property to others that are similar or that might be for sale with local estate agents. You will often find that the guide price of auction properties is set relatively low in order to entice bidders, so it is important to have in your mind what you think the true market value of the property is, and bid accordingly.
When you express an interest in a property to the auctioneers, there is usually a legal pack available for you to read. It is important that you digest this thoroughly, and essential you contact us, as we will be able to explain the pack thoroughly and help you plan a way forward. It may contain covenants or certain legalities which could have potential implications on the value of the property. Usually the pack will contain property and land searches, we can make sure that they are in order and haven’t raised any issues that could cause problems. We will also recommend that you have a survey completed on the property prior to the auction, to ensure full knowledge of the condition – this should be done as soon as practicable to ensure a smooth process.
You will also need to make your financial arrangements prior to the auction. You must have a 10 per cent deposit with you on auction day, and you must come up with the remaining 90 per cent within 28 days. If you need a mortgage, it is important that you discuss all of the financial implications with your bank, building society or mortgage broker and have arranged a mortgage in principle. It has been known for people to have paid their 10 per cent and lost everything because they were unable to find the balance in time.
The property auction
When you arrive at the auction, you’ll need to register. It is important that you take identification and enough funds for your 10 per cent deposit. Auction houses are often very busy, so it can be advisable to get there early if you want a seat. When the time comes to bid, make sure that you can be seen by the auctioneer and that it is clear you are bidding.
As the bidding increases, it is crucial that you have set a strict budget to work within. It can be very tempting to go over this figure, especially if you’ve invested a lot of time and effort prior to auction, but it could mean that you end up paying more for the property than it is actually worth. It may be advisable going with some one who can help maintain a business like focus.
If you are bidding on a property and it fails to meet its reserve price, this doesn’t always mean that this is the end of the matter. The auctioneers can still act as agents and are able to do a deal between yourselves and the vendors, if a price can be agreed at the end of the lot. This is often a good way to pick up a bargain, as a vendor might have been chancing their arm with their reserve price, but could be willing to do a deal after the auction. Likewise, it isn’t unheard of for a deal to be tied up prior to auction, so it may be worthwhile checking this possibility out with the auctioneers.
If you are successful with your bid for the property then all the research and preparation you have carry out will pay dividends in ensuring a smooth process towards completion. Don’t forget that you will need to arrange building insurance immediately, as you are now legally bound to buy the property.
Steve Clarke, Director Residential conveyancing in our Norwich office commented “buying a property at auction can be a really attractive and profitable proposition, however we find that if our clients have not undertaken the research and preparation needed, the process becomes more complicated and stressful. Talking to someone in our experienced and knowledgeable conveyancing department, as early as possible in the transaction, will always help in the long run”.
If you are interested in buying properties at auction, contact our residential conveyancing department on 01603 666001 or email firstname.lastname@example.org.