Have you thought about buying property at auction before? The majority of homebuyers are going to go about it the traditional way, spotting a property that’s for sale on the open market and working through real estate agents to land on a deal. However, some property might be put up for auction, perhaps for the speed of the sale, because it’s a fixer-upper, or it’s an inherited property that’s being handled as an asset. Either way, if you see a property on auction that you want, it can be helpful to know what to expect from the process.
How It Differs From Traditional Home Buying
There are big differences between an auctioned property and buying it traditionally. There’s no negotiation, no extended timelines, but rather things tend to happen quickly. The auction date is set, and when the hammer falls at that auction, the deal is finalised and legally binding, meaning you can’t change your mind. Auction properties tend to be sold “as seen”, meaning you don’t have as much time for surveys and inspections. It can be an intense process, especially for first-time buyers, but it has a lot to offer to those looking for a quick sale.
Getting Your Finances Ready
Often, buyers who go into an auction will have the full funding for the home ready, simply due to the speed of the buying process. It doesn’t leave a lot of time to arrange funding, meaning traditional mortgages typically aren’t available. However, you can work with an auction finance broker, who can help you find those that specialize in providing loans for auction property purchases. It’s worth noting that auction loans tend to have a shorter timeframe and higher deposits than others, due to the fast-paced nature of the purchase.
Researching The Property Thoroughly
Given the speed of things once the auction goes through, due diligence is essential. Each property comes with a legal pack, which includes important documents such as title deeds, searches, and any special conditions of sale. You need to look this over with the help of a solicitor and visit the property to assess its condition as best as possible before making a decision to bid.
The Bidding Process
Every auction has a bidding process, which can be fast-paced and surprisingly emotional. It’s important to avoid impulse buying, staying in control with a maximum bid based on your budget. The auctioneer will guide the process with incremental bid increases, so there’s no need to overbid. Some auctions also allow for online or proxy bidding.
After You Win
If your bid is successful, things will move quickly. You’ll have to sign a contract immediately and pay the deposit on the spot, at which point the purchase is legally binding. At that point, you will have a set timeframe to pay the rest of the balance, handling it through a property solicitor. Acting quickly is important, as missing deadlines can result in losing your deposit and facing other financial penalties.
Buying a property at auction isn’t too much more complex than usual, but it does have a few differences worth keeping in mind. With the tips above, it should be a little easier to navigate the process.