Purchasing a home through a UK property auction can be an exhilarating and rewarding experience, offering the chance to snag a property at a potentially lower price. But the process can seem daunting, especially to first-timers. Fear not, our comprehensive guide is here to walk you through the steps to make your auction purchase a success.
Across the UK, properties are auctioned off by various entities such as receivers, local councils, and investors. These auctions present a unique opportunity to buy homes that might need some love, have a short lease, or come with a history that makes traditional selling difficult.
Kick-off with Research
Finding Auctions
Start by pinpointing where you want to live. Register with local auction houses and subscribe to their mailing lists to get the latest property catalogs. In the digital age, the Essential Information Group (EIG) is a leading resource, offering alerts for properties in your chosen area, complete with historical prices. While there’s a fee (£175 plus VAT for three months), they also offer a free trial, giving you a taste of their invaluable service.
Auction Types and Preparation
Auctions now mostly happen online, either in a timed format, akin to eBay, or as live events. Familiarising yourself with the auction process is crucial, though the core principles remain the same whether online or in-person. Before diving in, ensure you have a solicitor skilled in auction processes by your side. Remember, most auctioned properties aim for a 28-day completion period.
Bidding and Buying
When you win a bid, the deal is instantly binding. You’ll need to pay a 10% deposit immediately. Mortgages can be arranged for auction properties, but speed is critical. Not every property will qualify for a mortgage; for instance, a missing kitchen can deem a house uninhabitable for loan purposes. A savvy broker can be your best ally in securing the necessary funds promptly.
Due Diligence is Key
Winning a bid means the property is yours, no backsies. Thus, it’s vital to scrutinise the legal pack and special conditions available on the auctioneer’s website about three weeks before the auction. Ensure your solicitor reviews these to avoid surprises. Viewing the property and engaging with neighbors can also offer insights into the property’s history and potential disputes.
Set a Smart Budget
Auction properties might need work, and renovation costs have surged recently. Factor in these costs when setting your budget. Resources like Rightmove’s sold prices and advice from local estate agents can help you estimate the property’s value and the financial viability of your plans. Keep in mind, guide prices are just that; the final sale price hinges on the bidding war that ensues.
The Quick Pace of Auctions
Properties are usually listed a few weeks before the auction, so act fast to visit, research, and assess the property. Registration with the auction house is necessary for bidding, along with undergoing standard identity checks.
Stay Calm and Bid Wisely
It’s easy to get swept up in the moment, but maintaining a level head is crucial. You might not win your first bid, but patience and persistence often lead to success. One of the best parts about buying at auction is avoiding the frustrations of gazumping, gazundering, and lengthy property chains. Once the hammer falls, the property is yours, marking the start of a new chapter in your dream home.