If you're eager to get going in the buy-to-let property world, then buying a property at auction will not only enable you to avoid the lengthy negotiations and processes which house buying normally entails but you could bag yourself a bargain.
As soon as that hammer falls then the property is yours but how do you actually become a successful bidder?
Before the auction
1. Locate an auction - look in newspapers and magazines, ask agents, follow up auction 'for sale' boards.
2. Find a property (also known as a 'lot') - request a catalogue from the auction house. Generally, there is a three to four week time period between catalogue publication and the auction date so you'll need to act fast.
3. Do your research - arrange to view potential properties several times. If you plan to do work to the property, take a builder or an architect with you so you can check that you have realistic expectations. Research and compare the property and investigate its market value.
4. Finances - ensure you have adequate finances. Generally, you will need a 10 per cent deposit on the auction day. The 90 per cent balance will become due 28 days after the auction. Arrange the mortgage in principle.
5. Legal - obtain a legal pack from the auctioneers and familiarise yourself with it. Seek independent legal advice. Conduct relevant legal property searches.
6. Do an auction dummy run - auctions can be nerve racking so it might be worth going to an auction as a spectator to see what it's all about.
7. Check whether a deal can be done before auction - not all properties have to be sold on auction day. It might be possible to purchase before the event.
1. Register - you will probably need two forms of identification. Additionally, you must have a 10 per cent deposit. Don't forget your banking details.
2. Arrive at the auction early.
3. Obtain an addendum sheet in case there are any alterations/additions to the catalogue.
4. Ensure you can see and be seen by auctioneer.
5. If you can't attend on the day check whether you can place your bid by phone or in writing.
6. Bidding - set yourself a limit. Don't get caught up in the moment! If you don't think you can handle the pressure then get someone to bid on your behalf.
7. Use clear gestures - raise your hand or nod/shake your head.
8. The auctioneer will look around the room and take bids until there are no more. If the reserve price is met the property will be sold to the highest bidder. The sale is confirmed when the hammer falls. At that point the bidder is under a binding contract.
9. The auctioneer's decision is final. The auctioneer can choose to refuse a bid with no explanation.
After the auction
If the property failed to meet its reserve price during auction find out whether you can do a deal now. If you are the successful bidder check when the balance of the property money is due. Remember to take out Landlord Insurance - the risk passes to buyer immediately.
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