Buying property at auction
Auctions are becoming an increasingly popular way in which to buy property – and it’s not hard to see why.
Buying property at auction allows you to see exactly how many people you are bidding against, eliminates the dreaded ‘gazumping’ and allows you to take the deal from offer to completion in less than a month.
What’s more, you can pick up a real bargain with a potential for profit.
In 2006, more than 15,000 residential properties were bought at auction, and while that figure accounted only for a small percentage of the year’s transactions, it marked significant growth on previous years.
Where auction-houses used to be the reserve of trade professionals, they have become more widely accessible to members of the public. No longer are auction details posted privately, they are open to all via the internet.
Simply logging-on to a property auction web site enables you to see where and when auctions are to take place. You can also use the site to browse lots in advance, giving you time to identify potential purchases and carry out the necessary checks.
If you plan to buy property at auction, bear in mind the following tips for securing a purchase.
Check the guide price
A guide price will be supplied for each property, but be warned that this is not an estimation of the final selling price – merely an indication of the auctioneer’s minimum expectation.
Decide on your budget ceiling and don’t go beyond it, whatever the circumstances. If you are drawn into a bidding war you can end up paying over the odds for a property.
You will need to make your financial arrangements (eg a mortgage) prior to the auction. After the gavel falls, you usually have just 28 days in which to complete your purchase, so make sure your lender is aware of the circumstances.
Early bird?
Before a lot even goes to auction, you are entitled to make an offer. If accepted, the property will be yours and won’t make it as far as the auction-house.
It’s a favourable option if you anticipate lots of competition for the property, but you do need to be able to pay a deposit straight away.
Bidding tips
Arrive at the auction in time to hear the auctioneer’s opening speech. The speech will explain the bidding process and is especially useful if you are not familiar with the format. You will also be informed of any withdrawn lots, or of changes to guide prices.
When you wish to enter the bidding for a property, make a definite and clear movement – such as a wave of your hand or catalogue. Bids thereafter can be less obvious.
If you wish to bid less than the incremental price, state your offer clearly to the auctioneer – who can then accept or decline your bid.
When the auction ends, if a property remains unsold, you still have a chance to buy it. Register an interest with the auctioneer before you leave – a private sale may still be possible.
Useful links
www.ukauctionlist.com
www.eigroup.co.uk
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