Going, going, gone to the auction!
If you think property auctions are only for professional property developers or investors think again. They can be a great place to pick up a family home.
In 2017, some £3,190 million worth of UK residential property was sold at auction, accounting for 21,024 properties. Even though this is just a drop in the ocean compared to the 99,800 residential properties bought through regular channels in December 2017 alone, buying at auction gives you the chance to pick up your dream home (or a fixer-upper) at a good price and makes the buying process much quicker.
Homes under the hammer
Before you take your place in an auction it’s important to decide on your price limit. You should base this on the price that similar properties in the same area have recently sold for – and of course your own budget. Remember to factor in any additional costs, like mortgage fees and any stamp duty that may be due. If you’re not a cash buyer it’s wise to get a mortgage decision in principle before you raise your hand, as winning bids are legally binding as soon as the gavel goes down. If you win, you have to pay a 10% deposit on the day and you usually have a further 28 days to pay the remaining 90%.
Know what you’re bidding for before you bid!
Before you bid on a property in auction you should go and view it – the same way as you would if you were buying through an estate agent. You should also take the opportunity to employ a Surveyor or similar to carry out a Homebuyers Report or Full Structural Survey. You won’t get the cost of the survey back if you’re out-bid in the auction but that’s preferable to ending up with a large investment in something that requires a lot more work – and money – than you bargained for.
If you’re thinking of buying your home under the hammer:
•You could find a great deal, whether it's an undervalued home with planning permission or a renovation project, there are plenty of bargains to be found at property auctions.
•It’s quick; the entire process should be complete within 28 days of the auction It’s transparent, so you won't have to worry about being gazumped, things falling through because of an issue further down the chain or a seller pulling out - and you won’t have to take an estate agent's word on the other bids.
•You must have money ready to pay the deposit on the day and the remaining amount within the allotted time.
To find out more about your mortgage options please get in touch.
Your home may be repossessed if you do not keep up repayments on your mortgage.
