With the housing market not quite hitting full recovery as of yet, housing auctions are very much still in fashion at this moment in time.
Many people are struggling to save up for a big enough deposit to buy in the area they would like, and auctions offer the chance to get something at a real steal. Additionally, popular TV shows such as “Homes under the Hammer” have glamorised the image of purchasing a property at auction, with the buzz and excitement of putting in offers until the hammer falls, at which time the house becomes legally yours.
Of course, you can’t just waltz into an auction room and buy a house without making proper preparations to do so. There are a number of things you need to consider, from the financial and legal perspectives.
Know your local area
Nobody wants to pay over the odds for a property. So if you know that there is something that you are interested in which is coming up for sale at an auction, make sure you take some time to see how much similar properties in the same street or area cost when they were sold. There are services online to help you do this, such as the one on www.zoopla.co.uk/house-prices/
Visit the property beforehand
Every experienced auction buyer will tell you that it is vital that you pay a visit to the property you are thinking about buying to check it out for yourself. This way you can see whether there is any damage which could potentially cause headaches for you in the future. Make sure you get a professional house survey done (as explained here www.which.co.uk/money/mortgages-and-property/guides/how-to-buy-a-house/house-surveys-explained/ )- the results of which will affect whether you will be able to get a mortgage for the property and will notify you of any urgent work which would need to be carried out. If there is anything you are unwilling to take on, it’s best just to walk away.
Talk to your solicitor
Buying a house at auction still requires all of the usual legal checks to be made, so make sure you get the property brochure and then either make an appointment to see your solicitor, or send them the details to look over. A conveyancer (find out more about what a conveyancer does on the Channel 4 homes website . They will check the title deeds, that the property is legally allowed to be sold and that there are no planning permissions which could affect the house and the area it’s in once you have bought it.
Sort your finances out first
If there is a specific house you are looking to bid on then you will need to have it evaluated by your mortgage lender to secure the relevant funds. If you are a buy-to-let investor, you may also be able to use a bridging loans service to get the finances for a short term basis until your mortgage has been finalised. Either way, you should ensure that you set a bidding limit for the property and not go over it. If you do your homework beforehand, you should still have a very good chance of securing the home for the price you want.