Buying properties at auction is a great to secure great bargains, but they can also be stressful and challenging if you don’t prepare for it. If you are well-prepared mentally, emotionally and financially, auctions can be a pretty exciting event. Keep in mind that if you succeed at auction, you will walk with a beautiful home that is yours.
Whether online or in-person, understanding the process is a key to feeling comfortable at a property auction. First of all, take time to inspect the property. Once you have fallen in love with your new home, now its time to get serious and knuckle down. There are many things to know before diving into the auction. Here are some tips that can increase your chances of success at a property auction.
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#1 Research as much as possible about the auction
Before you think about going to an auction, you should completely familiarise yourself with the area that you are buying in. Look at the similar properties in that area so you can estimate the true value of the property. To get a good grip on the market, look at the proportion of successful auctions in your area and auction clearance rate.
You should also look at the immediate area you are considering. Ask the real estate agent to provide you with a list of comparable sales in order to help you determine the property value.
#2 Check your finances
As soon as the hammer slams down, you are legally required to purchase the property if you are the leading bidder. That means, if the bank rejects your application after you win the bid, you could be in a serious trouble, and you are most likely to lose your 10% deposit amount, which is usually required at the end of the auction.
Hence, before you go to the auction, it is necessary to ensure that you have your finances sorted. Getting access to bridging finance London is a great way to arrange funds for a short period of time. So, based on how much approval you have got, make bidding mindfully and know when to stop.
#3 Inspect the property more than once
When it comes to the auction, there are no ‘take-back’ option. Hence, you need to be absolutely sure that you want to buy this property. Prior to the auction day, visit the property as many times as possible until you are satisfied. It is important to ensure that the home you are planning to buy is in healthy condition. Pet and building inspection should be the first priority. Understanding what is wrong with the building and how much money will be required to fix or renovate the damage.
Thoroughly checking the property before going to the auction will help you uncover all the secrets that a building holds. With this in mind, you can either continue buying the property, reduce the bid value or avoid the property altogether.
#4 Consider more than just the house condition
This is something that is often overlooked by many. Usually, properties are open for potential buyers to see and check. However, you should not stop there. If you are planning to buy an investment home, don’t just consider the home itself, but check out its neighbourhood as well. Walk by different times of the day, and check traffic conditions, noise levels, sold properties, proximity to hospitals, schools and public transport. Also, research online about what others are saying about this home. This way you will know what to expect before you attend the auction.
#5 Familiarise yourself with how auction and bidding works
Bidding is a skill that can be honed over time by attending several auctions. Don’t let your dream home auction be the first one. At least attend the 10-15 auctions and interact with other real estate agents, auctioneers and buyers. Pick up the language they speak and learn how to bid wisely in the auction. By attending different auctions, you will be able to gain confidence needed to successfully bid on your dream home.
Also, understand that auction is an unconditional sale. Hence, make sure you fully read and understand the terms and conditions before going to the auction, or ask your real estate agent if you have any queries regarding the bidding rules.
#6 Decide your auction strategy and bidding limit
Auctions are more than just raising your hand, announcing the bid and moving to your new home. One of the crucial things is to prepare a bidding strategy before going to the auction. First of all, set a price limit and don’t exceed that number no matter what happens. Most importantly, your limit should not exceed your borrowing capacity.
While deciding the amount, try to keep it uneven that is because bidding usually goes in the multiples of £500, £1000 and £5000. For instance, if you keep your bid £503,000, then that £3000 could help you win the auction. You also need to prepare yourself for a chance that the property will be ‘passed in’. Wear professional clothes and bid aggressively and confidently while raising your hand.
What Happens After You Win the Auction?
After you have won the auction, you will be required to pay at least 10% of the total amount as a deposit. That is why it is necessary to come with a form of payment, so you can pay the deposit amount at the same time and secure your dream property.
One of the efficient ways to arrange funds is getting a bridging loan. What makes them ideal for property auction is that they are easy to arrange. The rest of the amount is due within 28 days and bridging finance is the best way to meet these deadlines.
Final Words Each auction tip listed here will help you create a more successful auction experience for you. Along with adequate knowledge, coming being prepared matters a lot. It is always good to come with a well-defined bidding strategy rather than getting involved in a mad bidding war.