Buying property at auction is a wonderful option for those looking for one of a kind properties and fixer-uppers. If you notice something special about a property that others don’t, you may find yourself with a bargain!
If you think property auctions are merely a place for the experts, think again! In recent years, buying a property at auction has become incredibly popular for those who wish to avoid the traditional house buying chain. At auction, the sale is agreed as soon as the gavel hits the podium, ensuring no risk of everything falling through last minute.
What are the downsides to buying at auction?
Despite the transparency of buying at auction, you could still find yourself in a bidding war. If you end up losing the property, you will also lose any money you have already invested in researching and carrying out surveys on the property. Even worse, you could spend all that time researching the property only to find that someone has already purchased the property before it goes to auction.
3 top tips for auction day
Be 100% prepared
The majority of auctions will expect you to bring two forms of ID, plus evidence that you can provide the 10 per cent deposit. We highly recommend checking with the auction house beforehand.
Whatever time the auction may start, allow yourself plenty of time to register beforehand. At the same time, you should find yourself a seat, preferably near the back, that will allow the auctioneer to see you.
Stick to your plan
You should enter the bidding with a clear strategy in mind. Set your maximum bid and stick to it to ensure you don’t go over what you can afford. If you change your mind after a successful bid, be aware that the 10 per cent deposit is non-refundable and you will likely incur hefty administration fees.
Don’t lose heart
If you find yourself outbid on a property you really wanted, take comfort in the fact that you didn’t blow your budget. What’s more, you have gained auction experience, meaning the attempt could be easier!
The cost of buying property at auction
In addition to the normal conveyancing costs you would come across with any property purchase, there are several additional costs to keep in mind when buying property at auction.
Auction houses will often charge an admin fee, which in many cases is due on exchange of contracts for the property. Instead of a percentage of the sale value, this fee will usually be a fixed amount. Information regarding fees should be freely available from the auction house in advance.
Although the admin charges may not be a percentage of the property value, some auction houses will charge a percentage as a separate ‘buyer’s premium’. This is usually 1.5 per cent of the final sale price.
Some sellers will make it known that the auction fee and the cost of their conveyancing must be covered by the buyer. Therefore, it is important that you check the details of the auction before bidding.
Get expert advice on conveyancing
Buying a property at auction comes with its own unique considerations, which is why it helps to make other areas of the buying process easier. When it comes to conveyancing, Betesh Middleton Law is here to help. Get in touch to learn more about our services.