Summary: Do you want to invest in profitable property or simply buy a new home at a bargain price? If so, you want to consider property auctions.
Do you want to invest in profitable property or simply buy a new home at a bargain price? If so, you want to consider property auctions.
Properties sold at auction are often owned by mortgage lenders after repossessions, former council / housing association homes or have being empty for some time after the owner passed away.
In each case, the owner has put the property on auction for a quick sale and this can lead to some great deals on the market value.
Finding an auction
As auctions tend to cater for property professionals, rather than the general public, advertising and awareness of auction houses is limited.
A good place to start is looking through the telephone directory, yellow pages or searching on Google or Yahoo.
Another good tip is to keep an eye out for For Sale signs outside homes. Where the board says 'for sale by auction', call the telephone number provided. You will either get through to an estate agent acting on behalf of the auction house, or you will get through to the auction house directly.
If you get through to an estate agent, ask them for the contact details of the auction house. The estate agent may be reluctant to do this, so it is worth being persistent.
Once you are able to make contact with the auction house, ask to be put on their mailing list. Although there is likely to be charge for this, you will begin to receive details of properties due for sale.
Before you bid
Having identified the property that you want to buy, you will need to arrange finance. For most people this will mean approaching a mortgage lender and it is important to do this in advance of the auction.
Remember once you win a bid, you are legally bound to purchase the property and you need to be able to pay within a set number of days.
The mortgage lender will require a basic valuation of the property, but it is advisable to invest in a full survey as the property may be at auction due to structural problems, which the basic survey would not pick up.
Before bidding for your desired property, you may want to attend a few auctions to get a better idea of the experience.
Winning your bid
Set yourself a price limit, but do not get carried away and bid beyond it. Having had a valuation done, you will have a good idea of the market value and should not go above the amount agreed with your mortgage lender.
If your bid is successful, you will be legally bound to purchase the property and will need to put down a 10% deposit of the property's selling price. You will be asked to sign a contract, which you would have seen before the auction and the seller will be legally bound to complete on the day.
Finally you will need to pay the remainder of the selling price within an agreed period, such as 28 days.
Congratulations, you have just picked up an auction deal.
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