How to Buy Property at Auction (and, How to Pay for it)
Our advisers and brokers at Clear Idea have a wealth of experience in property development and auction finance. A common myth we'd like to bust upfront is that you need to be a cash buyer to purchase from a property auction. You do not. It is absolutely possible to find loans for properties you want to buy at auction. The process is very simple, very quick, and costs nothing.
If you’re curious about the auction process itself and how to arrange the finance required to complete the purchase (Tip #1 – get the finance sorted in advance!), our expert advisers and brokers have put together a practical guide to help you through the process.
The main benefit of buying auction property is speed. Sales are completed very quickly; once the hammer falls, contracts are exchanged immediately. The purchase usually completes within 28 days – no chains, no gazumping, no stress-inducing sealed bids or “best and final offers”.
Click here to access our FREE guide to the property auction process, but if you’re short on time and simply want a quick overview, here are 10 things to consider…
1. Sign up for auction house mailings to identify properties you’re interested in.
2. Do your sums and work out what you can afford – make sure you have the 10% deposit immediately available.
3. Get your finance arranged in advance – you’ll need to pay the full price within 28 days of the hammer dropping.
4. Do your research and due diligence – view the property (or information pack) first if that’s an option. Make sure you know exactly what you’re buying!
5. Take legal advice and do your “searches” – as you would with a normal purchase.
6. Consider getting a survey – not mandatory but definitely a good idea.
7. Prepare your documents for auction day – bring ID and proof of deposit.
8. Don’t get carried away at the auction! Bidding fever is real. Set a limit and withdraw gracefully if the cost gets too high.
9. Payment – a non-refundable 10% deposit will be required immediately. The remaining 90% will be payable within 28 days of the auction end.
10. If you win, move quickly. Speak to your property finance adviser/broker straight away and they’ll get the wheels in motion so you can complete your purchase quickly and easily.
Watch this space for a follow-up article on bridging loans (the usual type of finance used for auction purchases), including how they’re structured and what they typically cost. Spoiler alert! They cost more than traditional mortgage loans, but they're not eye-watering.
To conclude, property auctions don't need to be intimidating, you don't need to be an experienced property guru, and you don't need to be a cash buyer. You just need to be careful, organised and have a basic understanding of how the auction process works.
Speak to Clear Idea today about how we can help arrange finance for your auction purchases or any other kind of commercial finance you might require. Call today on 01473 598132 for a free, no-obligation chat or email email@example.com. Good luck and happy bidding!