If you’re concerned about the prospect of going to property auction houses, don’t worry. Get in touch with the auctioneer and let them talk you through it. The truth is, like any business, the auction houses want to see their customers happy and coming back.
There are many risks to buying a property at auction but they are all avoidable if you prepare, properly. The trick, as always, is to do your homework. Today, Andy tells a cautionary tale of a man he was working with who got a little carried up in the moment and ended up spending five-hundred thousand pounds on five houses that he realised instantly he should never have bought.
Auction properties come in all shapes and sizes. They can be tenanted or vacant and you need to do your research to avoid any nasty surprises. For an investment property having a tenant in place can be great. That will mean no void periods and will limit the need to employ a letting agent. But of course, that depends on who that tenant is and whether they are reliable with their rent.
On the day of the house auction, you will need to bring your debit card or chequebook, two forms of ID and the contact details for your solicitor. Because there are legally set deadlines when you are buying property through an auction house everything happens a lot faster than if you buy through an estate agent.
Property auctions involve fees for buyers and for sellers. For sellers, the fees are straightforward. For buyers, they can be a lot more complicated. The trick is, as always, to read the auction legal pack. There can be fees in there which you will need to know about before you put in your bid.
At property auctions, the shrewder investors tend to stand at the back but the important thing is to place yourself wherever you feel most comfortable. There are advantages to being able to get a good look at the room but when it comes down to it, bidding tactics are not the most important things to be worrying about.
At property auctions, ‘off the wall bidding’ is where an auctioneer invents a bid to drive bids in the room higher towards the reserve price. It sounds bad but it isn’t. If the reserve price isn’t met then the bidder’s being pushed higher could not have bought the property anyway.
Much of what is sold through property auctions are sold at below market value so buying at auction is still one of the best ways of picking up BMV property. But, all kinds of properties are bought and sold in this way and it isn’t uncommon for houses to be sold at over market value as well. It depends entirely on the motivation of the buyer.
A seller might get less for their property and a buyer forfeits their right to change their mind. But property auctions offer speed, certainty and security that is impossible to achieve when you buy or sell through an estate agent.
When it comes to property auctions, one thing you must pay close attention to is the legal pack. If you don’t know what you are signing up for then you might be in for a nasty surprise which could come in the form of additional costs, a shorter completion period or a whole host of other things. But be warned, the legal pack is written in legal language so it is always best to consult a solicitor.