Five Things You Should Know About Buying Property at Auction
If you’ve ever fancied buying a property at auction – maybe at a knock-down price before doing it up and selling it at a profit – it’s important you do your research.
Tim Chilton, interviewed in The Guardian bought a house at auction 20 years ago. Before he had even left the auction room, he discovered he had successfully bid for England’s most haunted cottage. While you probably won’t be this unlucky, inexperienced bidders can find themselves paying over the odds for properties at auction.
According to Nitin Aggarwal of insight company Property Deals Insights: “Even if you’ve done your homework, the auction room has an exciting vibe and it’s easy to get sucked into a bidding war. There are plenty of people who have more money than sense and will keep bidding far beyond the actual value of a property under the hammer.”
To help you avoid these pitfalls, here are five things you should do before you even step foot in an auction room:
- Check out the lots in advance but also research the local market thoroughly including property values and rental yields.
- Make sure you have all the legal documentation for the properties you’re interested in including planning permission and details of the lease and get your solicitor to have a look first.
- Be clear on the finances. Have a good idea of the property’s value, once you’ve done any improvements and how much the work will cost. Know your maximum bid before you arrive and stick to it.
- Remember, if you’re the winning bidder you’ll need to pay 10% immediately and complete in 28 days or less. This means you must be a cash buyer or have a mortgage agreement in principle.
- Use a solicitor experienced in auctions and be ready to instruct them immediately.
Read more on the Landlord Today website.