Buying a property at auction is a great way to get a house at a good price. It is also a much quicker buying process, once the hammer goes down the property is yours subject to the contract terms and there is no going back!
To ensure that you are prepared and do not find yourself in a predicament with a house that is not right for you or will turn into a costly project, make sure you do your homework first.
Buying at auction is a binding commitment and carries the same legal implications as a signed contract by private treaty. In most cases auction offices have copies of legal documentation provided by the sellers’ solicitors which can be sent to you.
You will need to have a mortgage in principal ready, tell the lender that it is for a property at auction. It is possible to get a bridging loan to pay for the property if the turnaround on the mortgage will not be quick enough. Although it will be very expensive due to it being a short term loan. Bear in mind that getting a valuation can be tricky, especially if the property is run-down.
Many buyers at auction use cash for the above reason.
Having a survey done on the property you intend to bid for will bring to the surface any potential issues and avoid you ending up with a property that requires major investment to make it structurally sound. Although it is an upfront cost and you are not guaranteed to win the house at auction, it is still strongly advised that you do this.
Contact your conveyancing solicitor early on. If your solicitor has prior knowledge of your intentions it will speed up the process if you win the house as you need to be able to move fairly quickly on the purchase. Your solicitor will also be able to review the house details and highlight any potential pitfalls, such as your requirement to pay the sellers’ fees.