7 Aug 2018 By WengYee Loke
Buying property at auction can be quite a process for those new to it. Here we have listed what are the six basic must-dos. They broadly cover what to do before, during and after the auction.
The first order of business you should look at. When buying property at auction, all due diligence has to be done before the auction. You don’t want any nasty surprises after winning the property. Unless you are experienced with this, it is best to get your solicitor to go over the legal pack.
We have written a blogpost on the various documents you can expect to find in an property auction legal pack. What is in a legal pack
While fortune favours the bold, it’s sensible to view the property before you bid. Pictures on the site or in the catalogue are always taken to show the property in the best light. Otherwise you might face a situation as below.
There are many things that you should watch out for and if the property is particularly old it might help to get a survey done. Or at the very least asking a trusted contractor to view the property with you.
If you are a cash buyer then it is easier to make sure that the cash is ready for the exchange (10% of the purchase price) and completion around 28 days later. Otherwise for a traditional auction, you will need to take out a bridging loan. Bridging loans are a short term solution so do shop around for rates offered and formulate an exit strategy.
When it comes to conditional auctions, due to the extra time available (20 working days to exchange) you will be able to look at securing a mortgage. It is advisable to try and get a decision-in-principle as early as possible. This will help determine what your upper limit when bidding is.
You’ve done the due diligence, got your finances arranged and now the actual time has come. But as you place your bids, you realise that it is going to go over and above your set limit. Do you carry on bidding? Or accept that the property isn’t going to be yours.
Emotions run high during an auction but it is important to know your limits! It may be that you end up overbidding for the property and get a case of buyers’ remorse in the days to come. Bidding above your limit will also send your pre-arranged finance plans out the door.
As with a traditional property auction, you have to pay 10% of the purchase price as soon as you win the property. If it is an traditional online property auction, do check the documentation of how the deposit will be collected. Here at Bamboo Auctions, we charge the winning buyer at the end of the auction part of the 10% deposit with the buyer having until 12pm UK time the next business day to transfer the rest over.
Of course if you are looking at bidding on a conditional auction, then you won’t be needing the deposit just yet. Instead, you pay a reservation fee (this does not go towards the purchase price) and then have 20 working days to exchange contracts.
It’s the final countdown…. To your completion date. You will want to make sure that everybody (you, your solicitor, the auctioneer/agent) are all on the same page of when completion is expected. That way everyone knows what date they need to work towards to make sure that there are no delays. You don’t want to be held liable for not completing and being in breach of contract. The seller could sue you for damages!
Ultimately, you have to approach property auction buying with a calm and level head. Remember to dot all the i’s and cross all the t’s! If you are every unsure about any step of the process, do not hesitate to reach out for help. Whether it’s through a forum like PropertyTribes, the auctioneer/agent handling the property or even us (by phone, email or even a tweet).
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