Do you know that going to an auction is the best way if you want to choose and get a property at the best bargain price?
Your purchase to the property that you choose is binding as soon as the gavel slams on your bid carrying all the benefits and drawbacks that come along with the property you just won.
Take the tips on how to successfully win the auction
Seek out local auction houses
The first thing to do is you need to research and know the existing auction houses operating in the area where you want to buy. Ask for latest catalogs and put yourself on the mailing list for future issues. Hence, it is essential to choose an auctioneer accredited by the regulatory authority. It will guarantee that the hard-earned you pay will be held in dedicated auction client accounts and will protect you and the seller alike.
Search what’s for sale
When your fingers are on the auction house catalog, tag the properties that got your interest and contact the auctioneer for viewings. Remember the release of the catalog magazines happens every month and the auction date.
Get your finances sorted
When choosing a property, know first where you get the funds. Buying will not be a problem if you prepare a full payment in cash. If not, it is essential for you to decide if you need to get a mortgage agreement from a bank or a credit firm.
· Know the maximum budget that you are capable of managing the risk. Hence, you should explain to the lender that the loan will be for a property at auction.
· Do not forget you need to pay the mandatory 10% of the sale price as soon as the gavel goes down for you. You will settle the 90% remaining balance in 28 days after that.
· A ‘bridging loan’ may also work to pay for the property if the turnaround on the mortgage is slow. However, be aware that this type of finance is designed to be short-term and expensive.
· Do your research and find those lenders that have short and quick processes in the assessment and approval of loans that fit your auction needs.
· A lender will always carry out a valuation procedure to the property to check if it was still adequate security for the loan you want. Often, it can be tricky if the property is dilapidated.
· If you organize well all requirement and qualification compliance, a mortgage is a feasible way of funding a property purchase at auction.
Go on viewings
It would be best if you arrange a viewing with the estate agent on the property you wish to win. It is also preferable if you take with you a house professional such as surveyor, builder or architect.
Check the legal documents and small print
The auction house will present you the relevant legal package of the property. It includes local searches, title deeds, and list of fixtures and fittings.
It will be useful if you have a solicitor that will review the small print. Expect that you will be busy with the upcoming auction. With a solicitor, you will be able to hit the ground and have all necessary compliance and will have a high likelihood that your bid will be successful.
Commission a professional to do a survey
It may not be a critical requirement, but it will be better to hire a professional that will take a health check on a property. Remember that the property sold at the auction is not in mint condition.
However, a Homebuyer’s Report is always available if the property is listed, old and in a bad state for repair.
Don’t do your calculations based on the guide price
The auction guide price is just a guide. It is always a practice to set the figure low in the catalog to invite bidders, and the property could sell for 10% more than the price shown.
Get covered with insurance
If you successfully take the property, the asset becomes your full responsibility. You start getting building insurance which will protect the bricks, mortar, and structure in events such as fire or flooding.
3 top tips for auction day
1. Be 100% prepared
· Bring two forms of ID, plus proof that you can afford to make a 10% deposit.
· Visit the auction house beforehand
· Do not be late, have plenty of time to register and get a seat that gives you both excellent visibility of the room and the auctioneer.
2. Have a plan and Stick to your plan
· Prepare a bidding strategy in your mind
· Bid only on what you can afford.
· Remember that if you change your mind after a successful bid, the 10% deposit is non-refundable.
3. Don’t lose heart
· Do not be emotional about whatever happens to the auction. If you are not successful in the auction, think that it is only for business and there will always be a next time. Take the lessons from experience and improve in the next opportunity.