The following is a guest post from Nicholas P. Julian. Julian is a property investor. He loves sharing his investment insights online. Today, he writes about a topic that I've been very interested for years, buying a property at auction.
If you are put off buying a property because of the current high prices, one option you may want to consider is buying at auction.
While auctions remain more popular with developers and property professionals, they are also becoming a good way for residential home buyers to find a property, often due to the possibility of picking up a bargain.
So could this be a way for you to find that property you've been looking for?
Why Go to the Auction?
One of the main reasons to choose a property auction to find your home is that you could find a great value property. There will be a guide price for each property, but some properties end up selling for less, so there is always the chance that you could do well.
In addition, there are no property chains to worry about, which can help to avoid anxious delays. And once the auction is over, the property is yours and no one can put in a higher offer.
It is an especially good option if you want to buy a property for development. Many properties sold at auction will require some work, so if you want to make money by investing in a property, doing it up and then selling it, auctions are often a good option.
How to Find the Perfect Property at Auction
Buying at auction is not something you want to go into unprepared. You need to familiarize yourself with the process before you buy a property.
This starts with choosing a property you would like to buy before the auction takes place. Get a copy of the auction brochure or see the properties on the website, and choose some that you would like to visit.
Always view the property in advance. Every property will have an open day, so go along to take a look around and decide whether you want to buy it or not. You should do your research at this stage to check for potential problems. These could be anything from structural issues to problems with the neighbors.
You may want to hire a surveyor to provide you with a report. If possible, you'll also want to hire a home inspector to highlight any work that needs doing. Also make sure you get access to all the information about the property including planning permission to avoid any surprises.
If you decide upon a property, you will need to ensure you have enough money to buy it if your bid is successful. When it comes to auction property finance, if you don't have the money to hand then you may be able to get a mortgage. This is usually possible, but the process is a bit more complicated because you don't actually know the final price of the property. Just remember to sort this out as early as possible because it could take weeks to get a mortgage offer, and you will need a firm offer before you can buy.
When you go to the auction, get there early to hear any announcements that may relate to your property. You will also have to register and receive your bidding number, show your ID and provide details of your solicitor.
You can usually bid in person, by phone, by post or online. Just make sure you know the rules about bidding because once the hammer goes down, it is a legally binding agreement. This is good for you because no one can come in and get your property after you have won the auction, and the seller cannot just change their mind.
You will then usually pay a 10 percent deposit immediately, followed by the full balance of the property within 28 days. However, you may be able to make an arrangement with the seller to pay later. You will also have to pay the administration fee and deal with the legal issues such as taking a copy of the memoranda of sale and legal pack to your solicitor.
As soon as you have won the property in the auction, remember that it is now your responsibility. It is therefore a very good idea to get your home insurance sorted out as soon as possible.
Find the Right Property at Auction
While most people stick with estate agents when they buy a residential property, you may find that you want to try out a property auction. These can be an excellent way to find a gem of a property for a lower price than you would otherwise pay, so it can be well worth it. Just make sure you are familiar with the process and that you know all the rules to ensure the process goes smoothly.