In an era where people buy their Christmas presents from eBay, it’s not surprising that buying property at auctions has never been more popular – one in twenty houses now go under the hammer.
With no commission paid to an estate agent, no gazumping, no failure to complete, and full payment in 28 days, auctions are a fast way to buy and sell.
But as you might expect, there’s a pretty mixed bag of properties, ranging from repossessions to local authority housing stock to quirky or unique houses that are difficult to value. Some are there for a quick sale because their owner wants to go abroad; others are hoping the buyer will overlook the property’s faults. Amateurs should be wary of placing a hasty bid in the excitement of it all – read why, by clicking here.
Whatever the property, it is essential that you do your homework well and prepare.
Follow these steps:
1. Do your research.
Identify what type of property and area you’re interested in and find out how much houses are worth. Websites such as www.hometrack.co.uk, www.provisor.com and www.mouseprice.co.uk all have house price data; while www.upmystreet.com has area guides.Talk to estate agents about who’s selling what. Talk to locals and find out if there are any problems with the area. Google the address – you might be surprised what comes up. Get on the mailing lists of local auction houses. Go to a couple of auctions and ask experienced bidders for their tips. Get used to the atmosphere.
2. Sort your finances:
- Get a mortgage agreement in principle. Expect to be questioned about your plans – lenders will be worried about their money and usually want to make sure the borrower understands both the auction process and the costs involved.
- Find out not only how much they’ll lend you but also how fast they can move. You’ll have to hand over 10% of the final price there and then as a deposit and pay the rest within 28 days.
- Remember to factor in the auctioneers’ fees and stamp duty. (Stamp duty is 1% of the sale price on properties between and £250,000, 3% between £250,001 and £500,000, and 4% on properties worth more than £500,000.)
3. Buyers beware:
You’ll need to get a survey done before you bid, even if you don’t win it. This means you could spend a thousand pounds on a house you’ll never own – it’s the major disadvantage of buying at auction, but don’t even think of skipping this stage.
4. Try getting in first:
The seller may take bids in advance if the property is listed as “unless previously sold” and could well be in a hurry. Alternatively, it’s worth asking the auctioneer if they’ll accept a bid for a property that’s failed to meet its reserve price.
5. Set a bidding limit:
Don’t exceed what you can afford. It’s easy to get carried away in the adrenalin-soaked atmosphere of an auction, and the auctioneer’s job is to get you to spend more than you want to. If you don’t trust yourself, try getting a friend or relative to bid for you.
For further information, see:
- www.eigroup.co.uk – the industry standard for information on auctions
- www.ukauctionguides.co.uk – a major source of information on auctions and auction houses
- www.wheresmyproperty.com – UK property search engine
- www.propertyauctionnews.co.uk – members-only newsletter with advice and news
- www.rics.org.uk – The Royal Institute of Chartered Surveyors provides a guide to buying at auction
- www.allsop.co.uk – one of the leading auction houses