If you’ve never attended a property auction before, the prospect of making a purchase in this environment can be daunting. Unlike purchasing through an estate agent or property investment agent, it requires split-second decision-making – and often nerves of steel!
However, don’t let this put you off. Buying a house at auction can result in serious savings, with many investors paying up to 20% less than the average market value. Here’s a few insider’s tips to ensure you get a great result at your first house auction.
Six Secret Tips to Buying a House at Auction
1. Know the real value of the property. Never attend a property auction without doing your homework first. If you’ve identified a house that you’re interested in, start finding out what other similar properties in the area are selling for. Even better, arrange to view the house before putting in a bid, to check what condition it’s in – both inside and out. If you’re really serious about buying, a survey can save you money in the long-run.
2. Don’t believe the estimated price. Often, properties are listed at an attractively low price, to encourage more buyers to attend the sale. As a general rule, you should anticipate paying around 20% more than the list-price. However, in most cases, this still means you’ll pay less than you would have if you’d have purchased through an estate agent.
3. Don’t bid too early. It’s tempted to get your bid in early when buying a house at auction – but sometimes it pays to keep your intentions unknown until the bid progresses. This is especially the case if the property hasn’t met its reserve price yet.
4. Get your finances in order. Property auctions are very different to traditional estate agent purchases. For starters, you’ll need to pay 10% of the property price upfront on the day of the auction, and you’re required to pay the remainder within 28 days – so you must have your finances in place before bidding. This means, if you’re planning to use a mortgage lender, you need a mortgage agreement in principle, before attending the auction.
5. Hold on to your nerve. Sometimes, it pays to wait for a while before placing your next bid. Bidding too early or too regularly sends the signal that you desperately want the property; which in turn, could cause a bidding war with rival buyers. It is a nerve-wracking experience, but it’s a good idea to keep your cool. If you don’t think you’ll be able to, ask a friend to bid on your behalf.
6. Stick to your highest price. First-time bidders often find the experience quite an emotive one, and it’s difficult to stop yourself from bidding if the property goes for a price that’s above your maximum budget. However, it’s vital to think with your head, not your heart – remember, this is a business venture!
The Buy2Let Shop Limited
If you’re thinking of buying a house at auction and want to find out more about the process, talk to The Buy2Let Shop team. We’re property investment agents in London, and we’re here to help you make a great return on your investment. We also hold regular property investment seminars, to ensure your knowledge of the market is up-to-date.
If you’d like to find out more about our services, simply visit The Buy2Let Shop website today.