Property auctions have historically attracted investors and purchasers searching for houses to renovate and resell for a profit, but now more than ever, they are luring buyers and sellers from the general public.
Buying property at auction is growing in popularity, but it is not ideal for every buyer’s situation. So, what are the pros and cons of buying property at auction?
1. You might find a terrific deal at a property auction
Whether it is a house priced under market value, a home with planning permission or a big remodelling job, you can get great deals when buying a property at auction.
2. You can move quickly
Following the auction, the full home-buying procedure should be finished in a predetermined number of days (often 28 days).
3. Property auctions can be a more reliable way to buy
Since contracts are signed right after the auction concludes, there is less chance of getting outbid or having a deal fall through at the last minute. Additionally, you will not have to take an estate agent’s word for it; you will be able to examine competing offers for yourself.
The Cons of Buying Property at Auction
1.You could be outbid
If someone bids higher than you, you’ll have lost time and money viewing the property and having a survey conducted.
2. You need to have the money ready
If you win the auction, you will have to pay a deposit on the day and will only have a set number of days after that to pay the total purchase price to the seller.
3. Auctions can be hit and miss
Some catalogues offer little more than commercial properties and complete wrecks that could end up being long-term money pits.
How buying a property at auction works
Every year, thousands of properties are sold at auction. Auctions entice ordinary buyers and sellers, in addition to investors and purchasers searching for houses to renovate and resell.
Auction houses publicly provide a list of properties, known as lots, to prospective bidders ahead of the auction day. Property auctions are often scheduled months in advance.
The majority of auction houses release their catalogues around a month before the sale, however some do so as late as two weeks.
Each piece of real estate will be offered with a guide price, which represents what the seller or auction company believes the item may be worth. The minimal amount the seller will really take is different from the reserve price, which is often kept private. Prior to, and on the day of an auction, guide and reserve prices are subject to change.
Even while they may be thrilling, auctions are not for the timid, and it is easy to get carried away and place a higher bid than you had meant. If you’re concerned about this, you can think about inviting someone else to go with you and place a bid on your behalf.
Can a financial adviser help me buy at auction?
The key to successfully buying a property at auction is speed and good organisation. An experienced financial adviser, such as Veracity Financial Planning, will be able to work to very tight time frames to arrange an appropriate mortgage in principle, as well as talking you through the whole process. This could make all the difference to your chances of getting a property at a great price.