It is becoming an increasingly popular practice for estate agents these days to partner with an auction house when selling properties. A large volume of properties is now being auctioned off with the goal of getting more members of the public to get access to them, instead of just offering them to private investors only.
If you are considering the possibility of buying a property through this method, there are things that you will need to learn first. Doing this for the very first time can be a little challenging. But when you know what are the things that you can expect from an auction process and what are the things that you should not do when you attend one, you can effectively avoid making expensive mistakes and other common pitfalls.
Research first before the biding day
You will want to know exactly how the bidding process works before you will start making one. Refer to the auction catalog to get a good idea of the flow of the process. You will feel more at ease during the actual auction when you already know what to expect. Also, make sure to visit the property that you are interested in to assess ahead of time if it is really going to be worth buying or not. It helps to take someone along when you do the visit to get another opinion and a different perspective on the property.
Learn some auction house jargon
It is easy to get overwhelmed with the bidding process when you do not understand auction speak. There is jargon specific to auction houses that you will want to familiarise yourself with to understand better what is going on. From reserve price to guide price to sale price, make sure you know exactly what each of these terms means.
Get your finances arranged ahead of time
You will be expected to pay 10% of the purchase price along with fees the moment that your bid has been finalized. In addition, you will be given a 14 to 28 day period of completion. It helps if you will be able to secure an approval in principle when it comes to financing your purchase before you will push through with the bidding.
Fees can easily add up
You will realize that the fees involved in a bidding process can easily add up. You will be charged an auctioneer or a buyer’s fee. There will be legal fees, as well as new finance fees, lender exit fees, survey fees, broker fees, and many others. It is important to do due diligence beforehand so you know exactly what you are getting into.
Dry runs are a lifesaver
It helps to know ahead of time how things are going to happen. Visit other auctions in other auction houses to observe how the bidding process unfolds. Observe at least two auctions to get a better feel for how things work.
If you want to learn more about buying properties at an auction, visit Richard Butler Creagh website. For more advice on bridging finance and property auctions, check out Richard Butler Creagh here and follow Richard Butler Creagh on Vimeo.