Bidding on a property can be a cut throat-business, requiring research, coolness and boldness. But to do the job properly one needs to take note of the following:
How to Get Started in Buying a House at Auction
Few investment property deals can match buying a cheap house at auction, according to the Royal Institute of Chartered Surveyors’ online resource, Clear, Impartial Guide to Property Auctions, (RICS, 2009). This makes it an excellent way for the first time home-buyer to get on the property market. However, the following pointers will guide the first-time bidder prior to making a bid.
- Locating the nearest auction house via the yellow pages or the Internet ensures the potential bargain hunter need not have to travel far. Better still, The Royal Institution of Chartered Surveyors keeps records of auctioneers who are members. These must follow codes of practice to protect the rights of the buyer and the seller
- Looking in the property supplement of the local paper will sometimes list properties going for auction, but one might need to trawl through to find it
- Auctioneers often produce catalogues weeks in advance of the auction and will send on request, copies to those on a mailing list
- It is a good idea to read carefully the terms and conditions on the catalogue and to get legal advice if necessary
- Sitting at a few auctions to see how they work proves to be good preparatory practice for those who wish to make a bid in future
- Working out a ceiling to what can be afforded will avoid over-zealous bidding and going too far
How to Prepare for Bidding in Auction
- Arranging a viewing of the house by prior arrangement enables the potential bidder to budget for unforeseen expenses such as building costs and essential repairs. They can also ask for second opinions from estate agents and builders
- It is a good idea to carry out searches and obtain office copies from the Land Registry
- Arranging a survey and a council search will reveal any mining subsidence, flooding risk or any restrictions on rights of way or usage
- If the buyer wishes to proceed with the bidding, the financial arrangements must be in place first. This means seeing a mortgage adviser or a financial adviser
- A 10% deposit payment on the property must be ready on the day and the remaining 90% of the funds must be paid within 20 days. Failure to pay within the 20-day period could result in the loss of the deposit
What To Do Before Bidding on a Property
- Arriving early will help the potential bidder prepare mentally for the day
- On arrival, one may need to register with the auction house to gain the right to bid
- A form known as an addendum may be distributed. This should be read carefully in case any details have changed on the property lots or if any of them have been suspended for another day
- Two forms of ID, a chequebook and bank details are necessary should the bidder win the property
- The bidder should stand clearly in view of the auctioneer and to make sure any bidding gestures are unequivocal. A subtle twitch or a nod of the head will not always be clear
- Winning the bid is as legally binding as an exchange of contracts
- However, if the property fails to reach the reserve, it might be worth leaving contact details with the auctioneer with an offer, in case the vendor of the property decides to let go of the property for less than the reserve price
Cheap Properties for Sale
One could easily bag a cheap house by attending property auctions. By making careful preparation before attending will ensure the bidder will not get carried away with the bidding or to buy a property with unforeseen costs. Getting advice from a solicitor and getting the relevant papers from the land registry and the council is worth the expense. Peace of mind is likely to result from sound research before making a bid.
Rachel Shirley - I have written and illustrated several art instruction books entitled Oil Paintings from your Garden and Oil Paintings from the Landscape ...
