If you hate drawn-out, tedious, traditional house-buying procedures, an auction might be the answer. Some truly unique properties often go up for auction, there's no chance of being gazumped (the sale is agreed as soon as the hammer falls) and there's always potential to grab a real bargain. Here's what we've learned about buying property at auction.
1. You have to act fast
Typically, the auction takes place around four weeks after the auction catalogue is published, so there's not much time to hang about! If there's a property you're interested in, make an appointment to view it as soon as possible. If you need a loan, get a 'mortgage in principle' sorted before the auction so it’s ready as soon as you own the property.
2. See the bigger picture
Auction properties are often in a poor state, but that's why you can get some absolute bargains!
3. Don't rely on the guide price
The guide price is the advertised price — and it's typically set a lot lower than the price the property will ultimately sell for. By monitoring the guide price, you can gauge the interest in the property (if the guide price goes up before the auction, it could indicate a high level of interest). To have a realistic price in mind when you go to auction, ask local estate agents and neighbours for their opinions, and compare it with other local properties on sale.
4. Be prepared
On the day of the auction, you'll need two forms of identification, such as a passport or utility bill, and proof that you can afford the required 10% deposit. Another tip: get there early to secure a spot you feel comfortable in (if the auctioneer is able to see you, all the better).
You might want to commission a homebuyer's report then a structural survey, but only if you're prepared to lose the money you'll spend on these if your bid is unsuccessful, or you decide not to buy the property.
If you receive a legal pack from the auctioneer for the property you’re interested in (this includes the title deeds, local authority and environmental searches, fixtures-and-fittings list and a seller’s information form, plus any relevant leasehold information), consider asking a solicitor to cast their eye over it. They'll be more likely to spot any loopholes or hidden covenants that could cost you money down the line.
5. It's a rollercoaster
Buying at auction is a thrill. Once you've experienced the high of buying at auction (and the low of losing out) you'll understand what the fuss is about. The incredibly popular and long running BBC series Homes Under the Hammer is great, but doesn’t quite capture the real exhilaration and blood-pumping adrenaline of the auction. Our auction experiences were submitted bids before the actual sale but we still felt the rush as the calls were made! And the rollercoaster ride didn't end there, as the pressure of having to complete in 30 days or losing the deposit (10% of the purchase price) plus the property itself took its toll. The good news is that the last property we bought at auction is now on a fixed deal for 2 years with the first 6 months of the deal rolled up, which basically means we’ve paid the first 6 months' rent in the purchase price. This gives us a great window to refurbish the property before putting it on the market for rental or sale.
If you fancy buying a property at auction, or attending one to see for yourself what it's all about, decide on the area you’re interested in and contact the auction houses that cater to that area. They can send you a catalogue, and add you to their mailing list. Check out Auction Property Scotland (APS), Auction House Scotland and Future Property Auctions for details of upcoming Scottish property auctions.