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What To Consider When Buying A House At an Auction
Have you ever thought about going to an auction to buy your next home? Auctions are a great way to get a good deal and avoid long and uncertain ways to buy something. We have made a list of the most important things to consider when buying a house at an auction.
Before: Look Up The Area
Choose the area you are interested in and contact auction houses in that area. They can tell you about upcoming auctions and put you on a mailing list so you can get the most recent auction catalogs.
When you find a property (or multiple) that you like, call the auction house to set up a time to see it. Make sure to check it and the area around it very carefully. You might want to bring a builder or repairman with you to find out what might need to be fixed and how much it will cost. Don’t be afraid to ask the auctioneer questions if you have them.
Get A Copy Of The Particulars
The particulars will contain important information, but you might need to ask for a separate legal pack to get the whole picture. Usually, searches are part of the legal paperwork, but if they aren’t, you can ask your lawyer to do them before the auction. Legal documents can be different for each property. You might want to ask a lawyer to look over the legal pack for hidden covenants or loopholes that could cost you more than you expected.
Be Ready To Move Quick
Even though it’s important to take your time when thinking about a property, there are usually only four weeks between the auction catalogue coming out and the auction itself, so you’ll need to move quickly. You may need to use hard money bridge loans to help this happen.
Ask To be Updated
You can always ask the auctioneers to let you know about any changes or additions to the terms of the sale. This is called an “Addendum.” If you’re interested, ask them if there’s any chance that the property could be sold before the auction date. This has happened before.
Create A Budget
Think about how much you are willing to spend on the property. Auction properties may be cheaper than their market value, but they usually need to be fixed up. Unless you are lucky enough to be able to pay cash, you will need to have a way to pay for the property before you bid.
Make sure you know how much the deposit will be and how it must be paid to ensure you have enough money on hand.
Buying a House at Auction: Stay On Top Of The Small Print
Don’t forget to read the auction house’s terms and conditions before you place a bid. If you do, you’ll be agreeing with them. Make sure you know the terms of the sale, like what needs to be paid and when. You don’t want any surprises on the day of the sale.
Even though there are a lot of things to think about, it’s a chance to have fun and doesn’t have to be hard. If you do your research, learn about the lot you want and the rules, and make sure your bids are clear, you have a good chance of winning and getting a good deal.
At The Auction: Be On Time
It’s best to get to the auction well before the time they say it will start. If there is new information or a modification to a property, it will be in an “Addendum,” or the auctioneer will say so before the auction starts. Make sure you know about any changes because they could affect whether or not you decide to buy.
Know The Difference Between The “Guide Price” And The “Reserve Price”
Know that each auction property starts at a “guide price” and has a “reserve price” that must be met before selling it. The guide price is where the bidding will start, while the reserve price is the least amount the seller will take. Bidders don’t know the reserve price, but it can be up to 10% more than the guide price, so keep that in mind when you bid.
Make Your Bids Clear
When the time arrives, make sure your bids are clear. Some auction houses will give you a paddle, so the auctioneer can quickly tell who you are when you bid. It’s easy to spend more than you planned, but try to stay calm and stick to your budget. The auctioneer should make sure everyone in the room knows where the current bid is and how much it is.
Someone Can Bid For You
If you don’t want to bid yourself, someone else can do it for you, like an agent or a lawyer. Some auctioneers will also let you bid over the phone or through a proxy. If you want to do this, you will need to give the auctioneer written permission and a check for the deposit. This is based on how much you are willing to bid.
Follow The Terms And Conditions
If your bid wins, you must sign the contract and pay the down payment immediately. As soon as the auctioneer drops the gavel, you are bound by the sale’s terms and conditions and are responsible for ensuring the property from that point on. If you back out of the sale after this, it could cost you a lot of money.
Buying a House at Auction: Learn About Deposits And Payments
Most auctions require a 10% deposit and two forms of ID on the day of the auction. You usually have between two and six weeks to finish and pay the rest of the purchase price. In the conditions of the sale, there will be clear information about any costs that are still due and how the sale will end.
You May Have The Choice To Buy Private If There Is No Sale
If the property doesn’t sell at the auction, the auctioneer may be able to sell it privately in the room right after the auction. Make sure to let the auctioneer know you’re interested before the sale and stick around until the end.