Buying a property at auction
Buying a property at auction can be both exciting and a potentially lucrative investment. Rachael Reay gives her 8 pitfalls to watch out for before bidding.
Buying a property at an auction can be both an exciting prospect and potentially a lucrative investment. However, it is essential that you seek advice from your solicitor before attending the auction in order to bid for property. The majority of people ignore this advice and simply turn up and bid on the day without having being advised properly in respect of matters relating to the property.
Once you identify a property of interest, you should contact the auction company in order to register your interest. You will then be able to view the legal pack and arrange a viewing.
Please be aware that if you successfully place the highest bid at auction, you become legally bound to purchase the property on the fall of the auctioneers hammer. You will normally have to pay a 10% deposit on the day and the balance will be due on completion which is usually set for 28 days later.
If you are thinking of attending an upcoming auction with a view to purchasing a property, please consider these tips so as to avoid any pitfalls:
- Do your research on the property or properties you are interested in.
- Make sure you read through the Legal Pack and inspect the property prior to the auction.
- Consider having a survey carried out on the property as some auction properties may need a lot of work, which could incur extra expenses you haven’t budgeted for.
- Ask your solicitor to look over the Legal Pack for you in good time before the auction. Enquiries can be raised with the seller’s solicitors if needed and you can be properly advised about what you are potentially purchasing.
- When you attend the auction make sure the auctioneer can see you and that he is aware of your bids.
- The purchase price can often go above the guide price if there are enough people interested in the property, so make sure you are aware what your limit is. People can often get carried away in the excitement of the day!
- Make sure your finances are in order and you are in a position to proceed. Some clients leave this until after the Auction which does not leave you much time if you need to obtain mortgage finance. This is extremely risky as if you do not come up with the balance of the money in time you could lose your deposit.
- Do your sums! You should make sure that you factor in the associated costs of purchase including stamp duty land tax, any fees or additional sums imposed under the sale contract as well as your legal fees.
If you have any questions on buying property at Auction please contact Rachael Reay on 01228 552222 or firstname.lastname@example.org.
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