Buying a home through auction can be an appealing choice due to its speed and affordability. Unlike traditional property transactions, auctions cut out estate agents and eliminate the risk of gazumping, where another buyer outbids you after an initial agreement.
While the fast-paced nature of property auctions can be appealing, it also comes with potential risks. Here, we highlight some key considerations to keep in mind before committing to a purchase at auction.
Be Ready to Act
Time is of the essence when buying at auction. With catalogues available only four weeks in advance, buyers must move swiftly to conduct research, inspect properties, and arrange finances before auction day.
Always visit a property more than once and at various times. A quiet afternoon showing will not tell you what traffic, business activity, or school crowds are like during busier hours. Seeing it at various times will help you make a smarter decision.
Viewing opportunities for auction properties can be limited, with scheduled open days where all potential bidders visit at once. Planning ahead ensures you do not miss your chance to inspect the property thoroughly.
Since viewing times can be as short as 30 to 60 minutes, conducting a full structural survey during this window may not be feasible. It is recommended to check with the viewing agent about arranging an independent survey at a different time.
Do not Miss Crucial Property Details
The auction catalogue gives you the basics, but it is important to ask for the full legal pack. This document often includes details on legal searches and any restrictions that might limit future use or development, potentially affecting the property’s value.
Do not assume everything in the auction catalogue is set in stone! Stay in touch with the auctioneers, as sale conditions may change, and some properties may be withdrawn or sold before the auction even takes place. Staying informed gives you an advantage.
Know Your Budget Before You Buy
Sorting out your finances is one of the most important steps before heading to an auction. Know your budget and do not get caught up in the excitement, overspending can be risky! Whether you are using savings or a mortgage, keep in mind that you will need to pay a deposit, usually 10% of the purchase price as soon as the sale is final. When the gavel comes down, the deal is legally sealed!
If you are bidding on an unconditional auction sale, be prepared to pay the full balance within 28 days. Miss the deadline, and you risk losing your deposit and covering resale costs. A conditional auction sale, on the other hand, gives buyers a little breathing room, an extra 28 days to finalise a mortgage and sort out things like insurance.
Secure Your Investment with a Chartered Surveyor
Auction properties are often listed due to the seller’s need for a quick sale or because underlying issues render the property un-mortgageable. Such factors make selling through a conventional estate agent challenging, positioning auctions as a practical alternative.
Do not rush into a purchase without knowing what you are getting into! A chartered building surveyor can give you a professional, unbiased opinion on the property’s condition, helping you avoid unexpected surprises.
At S Jones Surveying, we advise opting for a full building survey, as it provides a comprehensive report on any faults and their estimated repair costs. This ensures you enter the auction with a clear understanding of the property’s true value and an informed bidding strategy.