Buying real estate at auction can be a nerve-wracking experience, especially if you’re a first-time buyer. It can seem pretty daunting to be bidding against other people if you’re nervous about bidding over your maximum bid.
The atmosphere can be competitive, and the implications of a legally binding contract once the hammer falls can prove to be anxiety-inducing for some! Here are some of the major Dos and Don’ts when it comes to purchasing real estate at auction.
When it comes to buying at an in-person or online property auction, there’s no such thing as too much research! Make sure you know the ins and outs of the condition of the property you’re bidding on, the work that needs doing to it (including how much it will cost you), and the fine details of the legal pack. This includes doing due diligence on the auction house itself, and making sure that buying at auction is right for you.
It’s tempting to get attached to a property that you’ve viewed multiple times and have done much research on, especially if you’re a first-time buyer. This can be dangerous as it means you’ll be more tempted to bid over your maximum price on auction day! Make sure you won’t be swept up in the competitive atmosphere and agree to purchase something that is out of your budget.
As part of your research ahead of the in-person or online property auction, you should view the property you’ll be bidding on at least once… in person! There are some details that you just can’t appreciate until you’re standing in the property. Think about the location, and how much work needs doing to it while you’re there.
Some properties sold at auction may be run-down and in need of some TLC. Don’t be afraid to get stuck in and renovate a property! Not only will this mean you can make a property your own, it also means there is potential to benefit from increasing the value of the property in the long-term.
Before submitting any bids for real estate at auction, you need to be 100% confident on the legalities involved in the purchase. The legal pack must be examined by your solicitor, who can advise on any issues.
In addition to invaluable legal advice, you’ll also need advice from other professionals. Consider commissioning a building survey and inspection so that you can be sure of the absence (or scale) of any structural issues with the property. A visit from your builder will also be handy if you’re unsure how much a renovation will cost you.
A drone inspection may be useful to inspect the condition of the roof, chimney and external walls in a relatively inexpensive way.
Auctions run to a strict timescale, and completion is usually required to take place within 28 days of auction day. This means that it’s crucial that you have the necessary funding in place before any bidding can be done. Whether that’s a mortgage, cash or private investment, make sure you have everything you need in place ahead of time.
It’s important not to underestimate the speed at which purchases of real estate at auction can take place. This is a huge advantage for the most part, because it means that the process is much more predictable than a traditional sale through an estate agent. Your solicitor will need to be able to work to a strict deadline, or you may accrue interest.
It’s important that, once you have the correct funding in place, you don’t deviate from your budget. With the excitement of the day, it can be tempting to push your maximum bid, but this is not the sensible thing to do. If you successfully bid on real estate at auction that is out of your budget you will be legally obligated to buy it, and this includes paying a deposit (usually 10%) on the day.
Although the competition of an in-person or online property auction day can seem intimidating, it’s important that you enjoy the experience! It might be helpful to attend a few auctions as a spectator so that you can get a feel for how the process works and what the atmosphere is like, before attending one as a buyer. Look for a Real Auction near you.
Real Auction makes buying a property simple, transparent, and efficient with no hidden surprises. Whether you are seeking a new home, investment project, commercial property, or land we have thousands of options to choose from. Our platform facilitates the entire buying process from online viewings to bidding and buying. You can search for future property auctions on our website or by contacting our team.