In a time of growing repossessions around the world, auction purchases are becoming an increasingly common way to purchase property. Auctions are recognized as one of the best places to find a bargain buy, as well as providing a quick, secure and straightforward transaction process, with minimum fuss and in a completely transparent environment that is ultimately decided by the drop of a hammer.
Once you have achieved the first step of deciding to actually purchase a property at an auction, the next stage—as it is whenever you attempt to purchase property—is to make sure you’re prepared. If you’re planning on attending an auction, heed the following tips for a smooth transaction.
1. State of Mind
No matter how calm a person you may think you are, buying property at auction can be daunting as well as exciting. It's easy to get caught up in the moment and feel overwhelmed, so the last thing you want to do is panic and end up bidding too high for something and exceeding your budget. It's always advisable to have a maximum amount in mind before you go to the auction.
It is also recommended that you attend at least one auction before you attempt to purchase, allowing you to soak up the atmosphere and to familiarize yourself with how the whole thing works.
2. Property View
Once you're comfortable with the auction environment and you have chosen the auction that you wish to attend, the next essential thing to do is to request a catalogue to view the properties available and to then arrange with the auctioneer to see the properties you are interested in.
The auctioneers will have allotted times for each property. Although bidding on and buying a property you've never seen before may sound exciting, the chances are it will prove costly one way or the other. Remember, there's no point purchasing a house at a knock-down price if it needs knocking down.
3. Researching the Property
Make sure you do your research thoroughly on the property and compare its price and condition to similar properties in the area listed with local estate agents. You will very often find that the guide price of auction properties are set relatively low in order to entice bidders, so have in mind what you think the true market value of the property is…then bid accordingly.
4. Legal Matters
There is normally a legal pack on the property you are interested in available from the auctioneers. It is essential that you digest this thoroughly and if you're unsure about something, have a solicitor go over it; there may be more concerns with an auction property than that of one on the open market.
The completion period for auction properties is 28 days, so it is vital that you have your finances set up before hand, whether it's making sure you have the cash available or a mortgage set up in principle. A 10 percent deposit on the property is always required on auction day. It's not unusual for buyers to lose their deposit because they couldn't come up with the rest of the balance.
6. Auction Day
As well as having your 10 percent deposit on auction day, make sure you also have identification documents. What’s more, auctions can be crowded affairs, so get there early if you want a seat. When the time comes to bid, make sure you can be seen by the auctioneer and that he or she is aware of when you're actually bidding, as opposed to scratching your nose.
7. Bide your Time while Bidding
Finally, what the whole build-up comes down to, bidding for the property of your choice. Bidding at auction is a strange sensation; it's exhilarating and extremely daunting, especially as the pressure mounts and you are bidding for something that is popular and a number of other bidders get involved.
Stay as calm as possible, think clearly and bide your time while bidding. Remember to not exceed the maximum figure that you have set for yourself; it can be very tempting to go over budget, particularly if you've invested a lot of time and effort prior to auction. A good way to avoid this is to take someone with you who will help keep you in check.
If you are bidding on a property and it fails to meet its reserve price, this doesn't necessarily mean it is the end of the matter. The auctioneers can still act as agents and are able to negotiate between you and the vendors after the auction. Likewise, it is sometimes possible for a deal to be tied up prior to auction, so it may be worthwhile checking this possibility out with the auctioneers beforehand.
By familiarizing yourself with the auction process, you can increase your chances at coming out a winner with a new home in hand.
Published with permission from RISMedia.