There are multiple ways of buying a property. One of the fastest and probably financially satisfying is an auction. If you are ready to purchase a property and all the searches are carried out, buying a house at an auction will save you time and money, with a lesser risk for the deal to fall through at the last moment. Gazumping is not an auction risk.
Buying a house at an auction is usually fast, simple and less complicated. Check your finances and be sure you can cover the deposit and the remaining amount in the stipulated time. The paperwork process is faster, because the seller’s solicitor has a prior prepared pack, with details about the title, leases or searches.
You can go through the catalogue before participating in the auction, which gives you the opportunity to calculate your budget and even contact the tenants (if the case) for a pre-viewing.
If your interest is superficial, you will lose money. Once the hammer falls, the property is yours. If at any point, you decide to withdraw from the transaction, you will lose all the money invested up until that point, such as the deposit. On the other hand, you might invest money in the searches, making sure that the property is worth buying, just to find out that the property was already sold before the auction.
Decide on the area you want to purchase in and contact the auction houses. You can go through their auction catalogues and decide which property suits you and your budget best. The catalogue price is never the selling price. Most of the time, the final price for a house sold in an auction is bigger than the value stated in before the auction. An important aspect to remember is that a mortgage offer must be accepted before you go to the auction. If not, you risk losing a 10% deposit and the chance to buy the house. Get as much information about the house as you can and plan a viewing before the auction. If the house is in a bad state, but it has potential, it is a bargain.
- Administration fee to the auction house: between £200 -£300
- Solicitor’s fee
- Stamp Duty
- Insurance on the property
Like any deal, there are negative and positive aspects when it comes to buying a property in an auction. If you organise your finances, house searches and already read the contracts, the auction is a faster way of purchasing than a classic seller-buyer. However, if you do not consider all the aspects, you might end up losing money, time and the house.