Good news for novice property investors: auction sales. Nowadays, buying a first home or an investment property at an auction has undergone a paradigm shift. It is no longer reserved for seasoned portfolio investors or those people with mountains of cash. Property auctions have become a great way to purchase a property for a profit – especially since so many properties can be bought at a price well below market value.
In today’s uncertain economic situation, buying at an auction is a viable option for those looking for a quick yet cost-effective purchase. Property auctions are fast becoming a popular alternative to the traditional route of having to go through estate agents. A wide range of homes are now being put up for auction. With the rise in the number of properties being repossessed due to restrictive interest rates, properties up for auction have also increased.
Property auctions have also seen more novice buyers coming in. Most people have become familiar with bidding, perhaps due to online sites like eBay and some TV shows. Joining auctions is no longer an intimidating experience. Professional investors, bargain hunters and first-time home buyers are now turning to auctions to find the perfect property at an affordable price.
A property auction is exciting for the seasoned bidder, but a daunting experience for the first-timer. An auction is a heady yet bewildering experience, definitely not for the faint of heart. The number of properties up for auction has increased by over 60% in the past ten years. However, with more people participating, auctions have become a lot easier for the beginner. Before embarking on your first property auction, keep these tips in mind.
* Research beforehand on the property for sale. A good way to start would be to see if there is some information on the property available online. Also, contact the auction for additional details.
* View the property or lot prior to the scheduled auction day. Consider the neighborhood and the vicinity. Ask local estate agents for the going market prices of the nearby properties to determine if the price asked for at the auction is fair and within the current market rate.
* Arrange to have a survey done by an independent surveyor. Most properties up for auction are required to have a Home Information Pack but not a Home Condition Report. Though a survey can be costly (more or less £500), it is crucial in determining the maximum price you are willing to bid and the amount of repairs the property needs. Also, be prepared to consider the survey expenses as forfeited even if you do not win the bid.
* Carry out all other necessary checks on the property before the hammer falls. Seek the advice of a professional for structural and legal matters.
* Organize your finances. Remember that you have to immediately put down a 10% down payment once your bid has been successfully received, with the balance often needing to be paid 28 days after.