You’re interested in buying a property at Auction. You have your ideal property in mind, and you are eager to get to an Auction house. Buying a property at auction can be an exciting experience, and we wanted to help out by giving you a few tips, and things to consider.
Do your Research
First and foremost it’s important to do your research, not just about the type of property that you are interested in buying, but also think about looking through legal packs, and ensure that you have a good understanding of the bidding process, reserve price, and importantly your budget.
Know the Difference between Reserve and Guide Price
It’s important to note that properties listed at Auction will usually display a guide price, this is where the bidding process will start. However, a buyer will often have a reserve price, this is the price that the buyer would be happy to sell the property. The reserve price is not known to buyers but bears in mind that this could be up to 8-10% more than the listed guide price.
If you have an Auction house in mind, reach out to them to see if they have any legal packs ready for any of the properties that you are interested in. If not, it is a good idea to ask if the Auction house can request one from the seller.
As Legal Packs are essential, it may be worth instructing your own conveyancer to obtain these as they contain vital information such as searches, and any covenants attached to the land or property.
Ensure you have a 10% Deposit
When it comes to traditional Auction methods, a 10% deposit is usually required on the spot, when the hammer has fallen. This is where getting finances in order by looking at guide prices (taking into account 8-10% reserve) comes in handy.
If you intend on purchasing the property through a Mortgage Broker, then getting a decision in principle or bridging loan prior to Auction, would be a good idea. Once the deposit has been paid, the buyer usually has up to 28 days to complete the purchase.
Don’t Bid First
Finally, we would suggest not bidding first. You never know the first bid may start lower than you anticipated and give you more room to manage your bidding later in the Auction process.
Need Auction Finance
Interested in Auction Finance? Journey Mortgages can help you with loans for Auction properties. Get in touch via our contact section and we will be happy to take look at what is available.
Attention: Late repayments can cause you serious money problems. For help go to moneyhelper.org.uk