06.26.09
Quick Guide on Property Auctions
In today’s global economic downturn, buying properties at auctions has become a good alternative for people searching for cost-effective home purchase. This is probably the reason why property auctions in the UK have become popular, sometimes even preferred over the traditional buying from the general housing market.
With the growing popularity of property auctions, more and more people are joining the bandwagon. Even novice buyers are going towards this route. People familiarise themselves with the process by reading online articles about this topic, joining online bidding sites such as eBay, and watching auctions on the television.
Below is a quick guide on property auctions that you will find useful if in case you want to embark on this kind of home buying process.
How it Works
First, an auction house announces an auction event including details such as schedule and venue. If interested, you will need to register as a bidder in the auction house in advance, at least 48 hours before. Registration is generally free, and you will be given information about properties for auction. If you intend to buy several properties, you will need to register as a multiple bidder.
You have the option to attend open houses or make your own house inspections on the properties that are going to be sold. You can arrange to have a survey done on the property you are eyeing for. It is not smart to bid on property auctions houses that you have never seen before.
On the actual day of the event, house financing representatives who will offer you with spot loans that you can use for purchasing anew property. Although, they can come quite handy, it is better if you are already organised with your finances before going to the auction event.
Advantages versus Disadvantages
The benefits and drawbacks of property auctions can help you decide if this is the right route for you or not. One of the biggest advantages of buying at auctions is that you save a lot of money because as we all know properties sold at auctions are a lot cheaper than those sold in the traditional housing market. Sometimes, you can buy a house that is 20% cheaper than its real market value.
Imagine the amount of savings you will have if you buy a buy property in this manner.
Another prominent advantage of auctions is the quick and smooth transaction between the seller and the buyer. There is no more time wasted in endless negotiations and extensive shopping around for properties. In auctions, your choice will be limited to those properties being auctioned so in a way, making a choice can be somewhat easier.
Buying property for auctions is not always beneficial as there are various pitfalls for those who do not know their way around. One disadvantage of buying properties at auctions is that once the hammer falls, there is no way to change your mind.
This means, that if you find out that the house you bought have hidden problems, you cannot do anything about it except pay for the repairs. If the damage is extensive, you may end up spending more than what you originally planned. This pitfall can be avoided by thorough inspection of the house. This way, you will not end up buying a home that is about to throw apart.
Another big drawback is that the closing of the deal happens 28 days after the auction. Because of this, you need to ensure that you have solid financial source that can help you complete the purchase. Remember, the 10% down payment you put down after the bidding cannot be refunded if you fail to pay the balance.
Quick Tips
1. Sort out your finances.
Look into your current financial standing by weighing your assets and liabilities, and studying your income, expenses and savings. Determine how much money you can afford to invest in property auctions for sale. This is very important because you need to deposit a 10% down payment immediately after the auction and pay the balance within 28 days.
Also, set a limit price for your bidding and never exceed this no matter how exciting and intense the auction becomes. Overbidding can get you into a lot of trouble because you may end up buying a property that you cannot afford.
2. Inspect properties for sale.
Do not bid on a property you have not seen yourself. Sure, it looks great on the auction catalogue but it will not tell you the problems that it may possibly have. If possible, have a survey done by an independent surveyor so you can right away see if there are any problems lurking beneath the surface of the property.
3. Go to the auction prepared and confident.
Before you go to the auction, make sure you study everything you can about it so that you would know what to do. It is also a good idea to attend an auction as a spectator so you can see how the whole thing works. Moreover, you can seek advice from an auction expert who can teach you tricks of the trade and useful strategies on how to win in an auction.
If possible, position yourself in an area where it is easy for the auctioneer to spot you when you are making a bid. It also helps to extend your arm fully when making a bid. You do not need to wave a banner or shout crazily just to get the auctioneer’s attention, you just have to make yourself visible and noticeable.
4. Keep yourself updated.
Know the latest news and trends in the local auction market by reading articles online, reading newspaper or acquiring court records.
5. Establish good relations with the auction house.
It also helps that you communicate with the auction regularly so you can acquire useful information about properties for sale.
Property auctions UK has become a household term. It is sure to stay even with the current happenings around the world with the global financial crisis.
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