5 Top Tips for Buying Property at Auction
In an ever changing-property market, buying at auction appears to be surging in popularity. Leading auctioneer Savills recently reported that 79% of its lots were sold under the hammer in February 2023, compared to 70% in January and 66% the month before.
If this is a route you’re considering for your next property purchase, here are five top tips to help guide you to auction success.
1. Do your research
If you have an area in mind where you’d like to purchase, carry out some research into local auction houses. They can advise you on whether there are any auctions coming up, and the majority of them have mailing lists you can sign up for to be kept up to date.
2. View any properties that pique your interest
You can arrange viewings of auction properties before bidding day, just like you can with a home being sold on the open market. Attending a viewing in person is a no-brainer, especially when you consider that some auction properties are fixer-uppers.
Here’s a bonus tip: consider taking a plumber and/or an electrician with you to your viewing so they can spot issues such as faulty pipework or poor wiring, problems a survey might miss. Many tradesmen will agree to do this for a very small fee.
3. Set a budget and stick to it
Although auction properties are generally less expensive than buying on the open market, putting together a careful budget is vital. You’ll need to set a bidding limit and stick to it as well as get an idea of how much deposit you will need to put down.
Unless you’re a cash buyer, you will need at least 10% of the purchase price for a deposit, or an asset or another property of equivalent value to secure your purchase again.
4. Arrange your finance in advance
Again, unless you will have cash funds readily available, you will need to arrange your finance ahead of the auction. Since mortgages take too long to arrange for buyers under the hammer, there’s a special product available called auction finance for this purpose.
This is a short-term interest-only loan that can be arranged within 14 days, allowing you to access quick capital to secure your purchase. Longer-term, you would either need to remortgage, or sell the property on (if it’s an investment), to settle your auction finance bill.
5. Always check the small print
We shouldn’t really need to tell you this but a surprising amount of people overlook it. The small print is where you’ll find the finer details about the auction you’re taking part in, which may include the terms, conditions, when the money needs to change hands and how they expect you to pay.
If you need advice about auction finance, including how to arrange it quickly and get the best deal, make an enquiry with us and we’ll match you with a specialist in this area.