When you decide to purchase a property at a residential property auction, you may stand to benefit by purchasing a property way below its market value, however you should be aware that you also stand to lose a lot if you don’t stick to some basic rules, your only concern shouldn’t stop at how to buy property at auction, it also involves other important details. Mistakes are easily made so you have to be really careful about what you do.
How Do Property Auctions Work?
The basic premise of the residential property auction is that properties come to auction to be sold. When the bidding finishes the person who has bid the highest when the hammer comes down has won the bidding and is obliged to buy the property. This is subject to the highest bid being above a reserve price that is the price that was agreed between the vendor and auctioneer beforehand that the vendor will not sell lower than.
When property auctioneers bring the hammer down, this signifies exchange of contracts and is legally binding for both the vendor and the buyer. After the buyer has won the bid he will normally be approached by a member of the auction house and will have to pay a 10% deposit straight away and will have 28 days to complete the purchase of the property. However, the 10% deposit and the 28 days completion are the standard but these can vary and it is advisable to make sure before bidding on any particular property whether these apply to that particular lot.
To obtain more invaluable tips on bidding at a residential property auction visit out auction property tips page.
The following are some more useful pieces of advice which should be thought about before you go ahead and try to buy property at auction.
When buying investment properties one of the first things to make sure that you always do is to go to view the property in question with your own eyes.
To some people, this may seem like the normal thing to do but if you asked for the statistics of people who bid for property at a residential property auction without actually seeing it, you would be surprised. Catalogues look glossy and can be deceiving so when this deceiving look is combined together with cheap looking prices, you might take the dive a little too early.
Make sure that you aren’t swayed by fancy colour photographs or the auctioneers’ catalogue, do your homework yourself, in the case where you are unable to do so consider hiring a professional to do it for you.
The second tip is to ensure that you set a limit or ceiling for your bidding, never cross beyond this ceiling.
When in an auction room, you might get caught up in the moment and get persuaded to give up more than you want to, especially when persuaded by a professional auctioneer spearheading the proceedings. Any increase over the ceiling level you are willing to pay will mean that your money is involved, money you were not ready to part with before entering the auction room. Regulate your emotions like a tap for water and stick to your ceiling at all costs.
The third tip which will bring a close to this piece is to make sure that you prepare costings which are accurate before you proceed. It doesn’t make sense for you to buy a house or property at a residential property auction and pay above what it is worth to you and your portfolio. If you plan to fix it up and sell it on or rent it out, after you have completed the fixing up, you don’t really want it to be worth less than the price it costs you do buy and then renovate. This could be a disaster.
Everything should be worked out properly and with as much perfection as you deem possible. Assess everything from agent’s fees, property investment finance and a number of other factors in order for you to get a picture backed by smart and precise arithmetic. The money is in the details.
To find out where your local UK property auction is located, visit our property auctioneers page.**Nothing on this website should be confused with financial or legal advice. If you need this, or any other type of advice, please seek the help of a competent professional. In addition, because real estate laws change all the time and differ from state to state, and even city to city in the same state, everything in these pages should be considered general marketing advice and ideas. Please see link to full Disclaimer at the bottom of this page.