As house prices are still rising in popular areas, homes are usually already under contract by the time the estate agent’s board goes up. People should also find another source of purchase, apart from the traditional estate agent.
Every year around 40,000 properties are sold at auction in the UK – many at up to 30% below high street prices. Auction firms always focus on unusual, hard-to-value premises like churches and village halls, commercial lots with potential for change to residential property. Usually properties which need renovation get sold though the auction. This is why most of the time you’re going to find yourself in competition with professional property developers.
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To get property at auction requires very careful planning, full attention to details and good nerves.
If you succeed, the reward, could be a dream house at good price. But if you don’t do careful groundwork then your bargain could turn out to be very costly under- the-hammer horror. It is worth knowing that some superficially good looking properties go to auction because they have hidden problems like dry rot, strict planning restrictions, and bad neighbours.
Where to start?
About 250 companies run residential property auctions every single year in Great Britain. One, estate agent FDP Savills, holds ten national auctions a year in London and seven regional auctions. It says there is a very strong demand for all types of property at auction and there is good market for flats and houses which require refurbishment.
Every auctioneer will send you catalogues for all upcoming auctions at least one month in advance. That is time enough for you to do you homework. Examine property; check surrounding area to make sure it is suitable. It is also time to have the property surveyed. Ask you solicitor to check the title to the property and arrange a mortgage for you. If you are the successful buyer you need to plan to complete the purchase within 25 days of the auction. You also need to be ready to insure the property from the moment you get it.
Before you go to auction set your highest bid.
You need to estimate the total costs of decorating, repairs, surveying fees, mortgage fees, legal and removals and any other expenses – and then work out how much you are willing to spend. Do not forget buyer’s premium will add another 1.5 per cent on the top of selling price and also you need to pay stamp duty.
Pre-sale catalogue prices very often are wildly below the real sale price to get buyers to auction. Property prices can go up and down throughout the per-sale period. Please keep in touch with the agent.
If you are the successful bidder you will need to sign a legally binding contract after the auction. You will also need to pay ten per cent of the property price by cheque. Remember they do not accept cash.
Try to attend the auction a few times before you start bidding. It helps to get confidence. Check all local estate agent just to see at what price similar property have sold for.