Property Auction Advice
Are you attending a property auction? If you’re buying a house, auctions are an opportunity to discover exciting deals.
While there are benefits to purchasing a property at an auction, you need to understand the process first. Understanding the type of auction, as well as preparing properly, are important aspects of making a good investment.
Different types of property auctions
If you want to find a great deal, it’s important to have an adequate understanding of each type of property auction.
A voluntary auction
A voluntary auction means that the seller has chosen to put the property on the market. Sellers typically choose this avenue to make a quick sale at a good price.
The aim is to get buyers to compete against each other so that the seller can hike up the price. In these cases, the seller stipulates a reserve price and the sale only takes place with the approval of the seller.
While this is a great environment for sellers, there’s a lower chance that you’ll find a bargain at these auctions.
Bank auctions occur when property owners are facing financial difficulties. When property owners can’t make their bond payments, the bank can organise an auction to sell the property.
These properties are typically sold at reduced prices although the sale is subject to approval from the bank. These auctions are an opportunity to find bargains without facing the risks that are associated with forced sales.
The cheapest properties can be found at sheriff auctions, which take place when property owners are forced to sell their property due to financial difficulties.
These auctions are a last resort by the bank when they see no prospect of recovering their money. The bank submits an application to the court to have the property attached and the sale is overseen by the sheriff of the court.
While you can find the best deals at sheriff auctions, these sales are poorly advertised and they’re frequently postponed. The sale of property in possession refers to property that has been purchased by the bank.
The bank incurs additional costs when they buy the property, which adds the purchasing price. These properties are not always a good investment.
Sort out your finances
Before you start the process of buying a house, you’ll need to sort out your finances. It’s important to have your finances in order before you attend a property auction. When you buy a house at the auction, you’ll need to pay a 5% to 10% deposit on the same day.
This amount covers the auctioneer’s commission so it’s important that you have this money readily available to secure your property.
It’s advisable to secure a home loan prior to attending the auction. In order to get a loan with the bank, you’ll need to submit an application and pay a fee. The type of auction you attend will influence the additional expenses you’re liable for.
Others costs that will need to be paid on the same day include the deposit and sheriff’s commission in the case of a purchase at a sales execution.
Do your research
Make sure you research the property first before you go to the auction. You can find useful information in the auctioneer’s pack and additional research can be carried out online.
It’s also worthwhile to view the property first. Inspecting the property gives you a better insight into the pros and cons of buying it before you make a bid.
It’s important to remember that you’re buying the property as is so any repairs that need to be made will be at your expense.
Never let your emotions get the better of you
Make sure that you know what you are prepared to spend and don’t exceed that amount. In the excitement of bidding, it’s easy to go over your budget. The auction is final so you don’t want to end up over committing yourself.
Registering for the auction
You’ll need to prove your identity before you will be permitted to register. Make sure that you take your ID along as well as your proof of residence.
You can use your utility bills as proof of where you live. While buying a house at an auction comes with risks, you can find great bargains at these sales. Proper preparation will increase your chances of success when you attend a property auction.