The experience of purchasing a new home comes with many important and complex decisions that will have long-lasting consequences much later in the process. One of these key factors is the how you choose to purchase your residential property. This includes some of the more traditional methods of purchase such as Estate Agents but also (the topic of this article) property auctions. Unless you are a multi-property investor, you will likely have dismissed or overlooked this method of purchase as you are not familiar enough with its various benefits and limitations.
For this reason, the team here at White Horse Surveyors have put together the following article, to provide all the essential information on the process, benefits, and limitations of buying a home at auction…
One of the early stages of any property auction will be the release of the catalogue – listing all the upcoming properties along with a price guide (this is typically provided by the seller or auction house). Under standard procedure, the catalogue is published up to a month before the actual auction takes place – giving you plenty of time to consider your options and work out which homes are best suited to your personal circumstances.
This is also a good opportunity to conduct some research, consider what your bidding strategy will be and make sure to remember that the catalogue listings are simply a guide – be prepared for potentially increases in the purchase price and consult with experts in the field. The independent advice of a Surveyor will help to highlight any major issues with the property as well as advice on your best course of action. However, it should be noted that viewings before purchase are not always possible.
Nevertheless, if you are thinking about purchasing a run-down or dilapidated property to renovate, you should consider the cost of a survey before and after purchase. This will assist you in identifying issues for later fixes.
To learn more about the benefits of a Property Survey, simply click here.
Benefits of Property Auctions
No chance of the property chain collapsing.
One of the most common fears experienced by prospective homeowners is that their property chain will collapse. However, when you purchase a property via an auction this is not a concern– once you have won the bid the property is yours and you can avoid any uncertainty that typically surrounds the exchange process.
More likely to find a bargain.
Furthermore, due to the nature of the bidding process, you can potentially acquire a property for a significantly lower price than you would using traditional methods. This is typically a result of two factors:
- The property is old or deteriorating (making it perfect for renovations)
- The property is a bank/mortgage repossession (meaning they are much cheaper than usual)
If you have done your research and verified the suitability of the home for your purposes, then the chance of finding a bargain at auction is very real.
Fastest way to purchase a property.
Lastly, a property auction also represents the fastest method of which to obtain a home. After the bidding process has concluded you will be able to complete the transaction within 28 days with the added advantage of being able to sign any key documents as soon as the auction has finished – meaning you will not be able to miss out on the purchase.
Limitations of Property Auctions
It can be competitive.
Despite these advantages, it is important to remember that an auction can be competitive and there is every chance that you will be outbid for the property you had your heart set on. If you have spent the time to thoroughly review the catalogue and research the property, then this can be an especially frustrating eventuality.
Easy to over-bid for a property.
Before entering an auction room, you should always have a strategy that you will stick to. Amid the bidding war, it is easy to get caught up in the excitement of the moment and end up paying much more than you expected (or the property is worth). If you are not disciplined with your budget, then auctions may not be the best method of purchasing property.
Be aware of hidden costs.
Although not always the case, there can be several hidden fees associated with buying a home via an auction. In preparation, you should ensure that this is included as part of your research prior to the auction and (if necessary) adjust your budget to account for these additional charges.
If you are thinking about purchasing a property via auction and would like independent and impartial advice on your best course of action, please do not hesitate to contact our team of experts for an in-principal discussion.
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