With house prices continuing to rise, more and more people are being priced out of the property market.
Because of this, a growing number of people are looking at new ways to get onto the property ladder. Many are buying with friends, some are asking their parents to act as guarantors on their mortgages to allow them to buy before prices get even higher, while others are looking to buy discounted properties at auction. Buying at auction can sometimes be a shrewd move, especially if you secure a property for 10%-30% less than its open market value.Many properties going at auction are simply those that have been repossessed for non-payment of mortgage or bankruptcy reasons, they are often in a perfectly good state.
However, property auctions are not for beginners.
Experience of property is vital before you turn up at an auction, so if you do not have any (and many first time buyers almost certainly will not) either take along someone who does, or stay well clear.
You can walk away with great property at half the market price and in a quarter of the time it would take to buy on the open market. But if you make mistakes, you can end up paying through the roof for a lemon.
If you are determined to buy at auction, it goes without saying that you should know the area you intend to buy in well.
You should also have studied the brochure on the property you like in depth and have visited it in person.
Often, you will have less than a month to do this, so time is of the essence.
Make sure you know the price of similar properties in the neighbourhood and always try and find out whether the property you are interested has been on the market with local estate agents - and if so, at what price.
If an agent had it on their books for nine months and still could not sell it, there may be something drastically wrong, so you know that a full structural survey will be required.
If you are still keen after the viewing and your initial research, you may choose to hire a solicitor to carry out searches and sometimes even check the title deeds for any restrictions or problem areas. Along with a survey, this can be quite an outlay when you cannot even guarantee your bid will be successful.
In many cases, auction houses will make the guide price low as this will attract a large number of bidders.
This can result in a higher end price because of the strong demand for the property.
In other words, when they set prices low, auctioneers are often dangling a large carrot.
Did you know ?
Something that many people are unaware of is that auction houses publish the number of properties that sold and reached reserve price in the previous auction.
These figures are a good indicator in helping bidders determine whether an auction is likely to be a cost-effective step onto the property ladder or a costly transaction that is best left alone.
For example, if, at the last auction, every property up for grabs in your preferred area made reserve price, you know that it is a sellers' market and that the chances of securing a good price are pretty low.
In cases like this, buying at auction can be even more expensive than buying on the open market through an estate agent.
But if the figures reveal that the auction house found it hard to shift properties in the previous auction, and that very few made it to reserve price, this can be an excellent buying signal and a chance to snap up a decent property at a decent price.
At the auction itself, it is essential to set a price limit before you start bidding. It is easy to get carried away when bidding so always bid with your head, not your heart.
If your bid is successful, you will be asked to sign the contract in the "sale room" afterwards and be asked to pay a deposit, usually of 10%.
The balance is normally payable within 28 working days so it is important to have any mortgage arrangements well in advance.
Because the seller is legally bound to complete on the day of the sale, the property will be yours in time for tea.
I really hope this helps,as I know only to well how difficult it is affording a property.And god help those poor souls who have borrowed so much,just to get on the property ladder.....is it 'really' worth it? Let me know.....kind regards Debbie