This
is where great deals can be made. You can save up to 40% on a property
by buying it at auction.
Mortgage
lenders often put up their repossessed properties for sale, usually at deliberately
reduced "reserve" prices to ensure they sell quickly. Local authorities
and housing associations use them for similar reasons.
These
guys have a lot of flats/houses on their books and don't seem to see the value
of them as much as you might. They basically just want to get rid of them and
recoup some money as fast as possible .
Other
properties put up for auction will be those with development potential or difficult
to sell.
Of
course there are some downsides to buying property at auctions - though
these can be dealt with fairly easily.
Even though you've paid up to a few hundred pounds for these, there's
no guaranteeyou'll be the successful bidder.
However,
if you've got the spare cash the sort of savings possible could make it very worthwhile.
You
also have to move fast and there is much greater uncertainty
than buying a home the normal way - until the auctioneer's hammer falls on the
highest bid.
The
timescale from the announcement - basically when the auction catalogue showing
all the "lots" for sale is printed - to the date of the auction is often
only three or four weeks.
However
it's quite possible to arrange everything within that time if you organise yourself
properly.
Basically
the process is the same as that outlined in
Completing
Your Property Deal ie as if your offer has been accepted and you now have to arrange
the actual purchase. (Of particular relevance would be the section on
Get
ready to hassle - to make sure things move quickly)
Many
normal individuals from all types of different backgrounds, with no experience
of auctions, have done it succesfully and are very glad they did.
A
further benefit of buying at auction is that you can buy your home more quickly
because it isn't part of a slow moving and stressful
chain.
If
you're nervous about the auction process (which isn't nearly
as scary as it's made to look on films) you could get your
solicitor or surveyor to do the bidding for you. You can
either stand beside them or, if you prefer, could stay at
home clutching teddy and waiting for the phone to ring with
the news.
You should always set a price limit
on the property.
If
you're doing the bidding yourself don't get carried away and exceed
it. Just because someone else is bidding higher doesn't mean the property has
suddenly gone up in value.
You
would know what to pay for your chosen property because you'd have
conducted a valuation/survey
and the conveyancing
and arranged a mortgage beforehand.
The
mortgage
lender will need to be satisfied with the valuation so make sure they're
in agreement with your arrangements ... otherwise there'll be a delay.
You should also consider having a full survey done to protect yourself. Perhaps
the property is for sale because it's got serious structural problems... which
a simple valuation may not pick up... It may cost more but it will save you from
a potential huge loss.
If
your bid is successful you are legally bound to buy the
property and will need to put a down
payment deposit there and then of 10% of the property's price.
You
would sign the contract (which you've seen beforehand) in the sale room.
The
seller is legally bound to complete on the day. You would pay them
the rest of the price (ie 90%) within the next 28 days.
Unfortunately,
finding the auctions is not at all easy.
Most auction houses only send
out information to trade professionals. Advertising and publicity are expensive
and there even seems to be an underlying attitude that they don't really need
the general public.
So
you'll be fairly hard pressed to track them down. But - with the huge savings
you could make - it'll be worth it.
A few tips on finding auctions
The
local phone directory may have quite a few entries for auction houses. But you'll
find that these often turn out to be auctioneers for unrelated subjects like art
or furniture. There may hardly be any for property.
The
other thing to bear in mind is that the areas covered by auction houses are not
necessarily local to them. An auction house in Northern Ireland may well be selling
property in London.
One
method of finding auctions is to take note of any "For Sale" signs
which mention that the sale will be by "Auction".
Phone
the number on the board. It'll either be an Estate Agent or the auctioneers themselves.
If
it's an Estate Agent ask them who the auctioneers are. Then phone the auctioneers
and ask them to put you on their mailing list. There's often a charge for this.
Even
if you simply want the catalogue - showing what's for sale in the forthcoming
auction - you may well have to order it via a premium rate phone number, costing
£1.50. (Strange but true).
However
if the experience of this writer is anything to go by, getting information on
auctions from Estate Agents is not that staightforward.
The
agents may try to strip you bare of any information - just in case they can "help
you" - before giving you details of the auction house. And then the auction
house might not send you anything despite, in our case, several increasingly irate
phone calls.
Time
is precious. On average you've only got three or four weeks to play with.
So you need to know what's coming on at auction as soon as possible. And to get
a head start over your competition you need to be one of the first to get the
catalogue - ie as it's printed and released - just like the trade
professionals.
It's
not much good getting it a week before the auction takes place.
Useful websites
Basically
finding auctions is a major pain but worth the slog. There
are various websites that can help you cut out the effort
by providing this info.
Some
are free but the problem with these is that they only give limited info and you
don't know what you're missing. Typically they've been put out by a small
group of Estate Agents and are out of date.
We
tried cobbling together as many of the freebies as possible but frankly the picture
we got was inadequate.
The
best way to go really for websites is to pay for one of the subscription types.
It may cost but at least you know that the info is complete and up to date.
Try
a good search engine like Google and search
for "UK property auctions" or a similar
phrase to find the best property auction websites.
Don't
buy a property before you've sold yours ie
before the completion has happened - assuming you're relying
on that sale to buy at the auction.
Don't
buy a property without having had a survey done. Not only will you
limit the potential nightmare of building problems but you'll also have a basis
on which to bid, as well as knowing your mortgage limit and how much of a deposit
you'll need.
Always
set a price limit on the property.Don't
get carried away and exceed it.
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Please
note, this information is NOT necessarily RELEVANT in Scotland
