How Does Buying a House at Auction Work?
Buying a house at an auction can be an appealing option if you’re searching for a bargain. It’s also where you can find unusual properties not available through estate agents, often because they don’t know how to sell them. This offers a quick way to buy your new home too, as the sale is agreed as soon as the hammer falls, with no chain forcing the sale to collapse. In recent years house auctions have become more accessible and common for home buyers and not just experts with insider knowledge, and this is how it works.
Before the Auction
If you’ve never been to an auction before, it’s vital that you do a lot of preparation, starting with finding an auction. There are plenty of online letting agencies that organise property auctions, and will post details of when and where they’re being held. Once you’ve found one, take a look through the catalog of properties set to be auctioned and mark off those you’re interested in.
The guide price can be set to try and make a huge profit, so instead ask around at local estate agents and review sales of similar properties to get a realistic idea of prices. Sometimes you will be able to view the houses before auction, which you should treat like any other viewing, otherwise you can just see it from the outside and study the description. It can be worth taking a builder to the viewing and getting a survey done, while organizing your finances and lining up a solicitor is essential as well.
On the Day
Sometimes you can put in an offer before the auction, which many people don’t realize. Check with the auction house, especially if there’s a property you really want, as it can take away the hassle of going through the auction process and secure your dream home. Otherwise, on the day it’s important that you arrive early, stick to the plan and stay calm. Don’t over bid and end up in financial difficulty.
You will need two forms of identification (passport, driving licence, utility bill) and proof that you can afford the 10% deposit required. Should you be outbid, don’t worry, it’s better than blowing your budget and there will be other good properties that you find in the future.
After the Bidding Finishes
Should you have a bid successfully accepted then you will have to pay the deposit there and then at the auction. However, there will also be auction and/or bidding fees, which will vary depending on the auction house but can be around £1,000, along with vendor’s costs which you need to factor into your budget.
Once this has all been sorted you will probably have around 20 to 28 days to cover the rest of the balance. For this reason, it’s advisable to sort a mortgage out beforehand just in case, as it might be a rush to do so in just a few weeks. Then when this is all done, the house is yours!
Buying a house at auction isn’t overly complicated and you can unearth some real gems if you’re lucky and well-prepared.