Many auction properties sell for a third or more less than similar homes offered by an estate agent.
However, you need to be auction sale savvy before making a bid – and here are eight essential tips to help avoid a financial disaster:
• Read the catalogue before the auction – Don’t wait until the sale day and go in bidding blind. If you see homes you like in the catalogue, do some research about the area, rental prospects and take a drive-by to see what the neighbourhood is like
• View the property – If you seriously want to bid, view the property. If you are not a builder or surveyor, take a professional with you to identify defects and the costs of putting them right. Look everywhere – that includes under carpets, behind furniture, in cup boards and the roof space.
• Compare the price – Once you know the guide price and the cost of any refurbishment from your building professional, go online and find out how much similar homes in the neighbourhood making on sale with an estate agent or how much rent they generate a month
• Check out the legal pack online – Ask a solicitor to go through the title and sales papers to pinpoint any potential risks, like rights of way across the property
• Have your finance ready - You’ll 10% deposit when the hammer goes down – - and have to pay the rest within 28 days. If you need to borrow, you need to know your mortgage or bridging lender can complete within the deadline or you risk losing your cash
• Go on a dummy run to see how an auction works – If you are an auction newbie, its worth going to a sale just to see how they work. That way, when you need to bid you’ll understand more of what’s going on around you
• Register on the day – Sign in at the auction on the day of the sale. Provide ID and proof of funding to make sure you bid is accepted. If you are unsure what’s needed, talk to the auctioneer before the day of the sale
• Do a deal after the auction – If a home fails to meet the reserve, you can talk to the auctioneer negotiating a price with the seller
Buying at an auction can definitely turn up a bargain – but can just as easily up some turkeys as well. Make sure you are well prepared for the sale before making a bid.
