Buying a property at auction can be a tempting proposition as the whole process can be extremely quick and comparatively cheap – you don’t have to deal with estate agents and there is no chance of being gazumped by a rival buyer. Figures compiled before the coronavirus lockdown showed it was becoming an increasingly popular method of buying a home.
However, the speed of the process can also create a few pitfalls. Here Anderson Associates, chartered building surveyors who are based near Ipswich, outline a few of the key factors to bear in mind if you are interested in buying a property at auction.
Auction catalogues are generally sent out four weeks ahead of the sale. This doesn’t give prospective buyers much time in which to carry out all the preparatory work. So you will have to do as much research as possible in the time available.
Ask to see the property or properties you are interested in and view them during different times of the day – what may look attractive on a quiet weekday afternoon may be less enticing first thing in the morning or in the evening when the traffic is at its busiest, when nearby businesses are opening and closing, or school term times.
Some auction houses only have specific days and times when properties can be viewed, which usually means potential bidders all attend a viewing at the same time.
In addition, this can sometimes only be for half an hour to an hour, which is not sufficient time to undertake a proper detailed survey. You would therefore be advised to contact the viewing agent to see if a separate appointment can be made to allow a proper survey to be undertaken.
Ask for All the Details
While the catalogue may contain the key details, often there will be other material which you are entitled to ask for. If there is a full legal pack ask for it from the auctioneers, as this will often contain information about legal searches and any hidden covenants which apply to the property. This type of detail can easily affect the value of the property by limiting any future development or use of the land.
Keep in touch with the auctioneers in the month between the catalogue being issued and the auction itself, as the conditions of sale can be altered or amended at the last minute. It is also not unknown for properties featured in the catalogue to be withdrawn from sale, or sold, before the date of the auction.
Sort Out Your Finances
Another key element of your preparations are your finances. It is essential that you know how much you can afford to pay for the property before you go into the auction room – and don’t be tempted to go over budget. Whether you are paying with your own funds or arranging a mortgage, bear in mind that you have to pay a deposit – usually 10% of the purchase price – when the sale is completed. You are deemed to have exchanged contracts as soon as the auctioneer’s gavel comes down.
If the property is available as an unconditional auction sale, then you must pay the remainder of the balance within 28 days. If you fail to meet this deadline then you could lose your deposit and be liable for the cost of reselling the property. A conditional auction sale is better from a buyer’s perspective, as this gives you an extra 28 days to put a mortgage in place and sort out any other details, such as insurance.
Employ a Chartered Surveyor
Properties are most often put up for auction because the seller wants a quick sale or because there are major issues, making the property unmortageable and therefore more difficult to sell through residential estate agents.
It is essential to get some expert advice on the condition of the property before you make any financial commitment. Independent chartered building surveyors will give you an expert, unbiased opinion of the condition of the property. Anderson Associates work directly for clients in Ipswich, across Suffolk, Essex, Kent and south and east London.
Full Structural Surveys from Anderson Associates
At Anderson Associates, we recommend a full building survey, as this will include details of any faults and what they are likely to cost to put right. This provides you with a realistic idea of how high you should bid when you go into the auction room.
We also offer a range of other services. We can deal with any property disputes where work has been carried out, and also offer building maintenance planning, which is particularly useful for people who share the freehold in a block of flats and who need to know how much work needs doing before they approach a contractor.
If you would like to know more about any of our services, call us on 01473 623656.