Do you have plans to delve into the property market? Perhaps you’re looking to upgrade your home. Or maybe the kids have flown the nest and you’re seeking to downsize. Alternatively, you may be on the lookout for a property to add to your existing portfolio.
Whatever your reasons, it is important that you make sure your finances are in order. Data from the Office for National Statistics reveals there are approximately 100,000 residential property transactions each month in the UK, although the majority of those are completed on the market. Nevertheless, it may also be worth scouring the auctions for the ideal solution.
But auctions are becoming increasingly popular as buyers look to expand their options in search of that perfect property. And, if it’s an avenue that you’d like to explore, it’s important to have a full understanding of the process, what will be required of you, and the various pros and cons of buying at auction.
What do you need to think about prior to auction?
- First and foremost, it’s a legal requirement for you to have seen the property for yourself before you bid for it at auction.
- You will need to take proof of ID to the auction, such as a driving licence or passport. This is to protect against money laundering.
- Just like with purchasing any property, it’s highly recommended that you first examine the paperwork – such as the title deeds and the results of any surveys that have been carried out.
- If you are successful in your bid, you will complete the transaction there and then, which means you need to make sure your finances are in order and you have the funds readily available.
What are the advantages of buying at auction?
- Auctions can offer properties that are suitable for a specific project, such as a barn which is yet to be converted, or an old hotel or residential home which can be adapted to suit your needs. Properties that need vast amounts of work can be difficult to sell on the market, which is why auctions can be perfect for buyers with grand designs in mind.
- They can also prove advantageous for the likes of landlords, who are seeking buy-to-let properties.
- The average house price in the UK as of December 2019 was £234,742 and often, the auction value can be around 10% down on the market worth, meaning there are some excellent deals to be had.
- If you succeed in tabling the highest bid, you will complete there and then – there’ll be no need to wait on the chain or any number of other factors that can delay a sale.
What are the drawbacks of buying at auction?
- One of the downsides is that auctions usually occur during the week, meaning you may have to take time off work, and the location may not be close to you, which would potentially involve travelling long distances.
- If a property is available at auction, there’s a good chance that it struggled to sell on the market, so you need to ask yourself why. Is there something fundamentally wrong with it? This is where visiting in person and doing due diligence on the paperwork proves crucial.
- There’s also no backing out once you’ve bought at auction. On the market, if you have a bid accepted but something happens to change your mind, that’s always an option. That’s not the case with auctioned properties.