If you’re a fan of Homes under the Hammer, then you’ll be familiar with the concept of buying a property at auction and the amount of potential that comes with them. If you’re looking to start up your property portfolio, dip your toe into property renovations or just looking for your first property, we’ve put together a helpful guide to buying from an auction.
Types of property sold at auction
Any property can be sold at auction, but some types are more commonly placed for auction rather than the more traditional methods.
- Properties with renovation potential – Developers looking for a property to modernise or refurbish often seek out opportunities at auction
- Land for building on – Plots and land for development, often coming with some planning permission, are sought after at auction
- Property selling for less than market value – Sellers looking for a quick sale or properties that have been repossessed
- Properties that have been left empty
Buying property at auction
As more Scots look to make their first step on the property ladder and even consider second properties as investment opportunities and an extra source of income, there is a buzz and excitement about buying property this way and there are certainly advantages.
- Property is often cheaper, you’re also aware of what the other buyers are offering so it’s more transparent
- The sale also goes through quickly
- In some cases, the auction may accept offers before the event itself takes place
However, if you’re not familiar with the auction process, it can seem daunting and it’s best to do your research beforehand. Here are just some things to consider.
- Due to the increased speed of the transaction, your mortgage or finance should be in place before making a bid. You will need to inform your lender that you are considering purchasing your property at auction as it can change the terms of the loan.
- Enlist a solicitor to go over any paperwork and fine print.
- In some cases, you may be able to view the property before the auction but it’s best to speak to the agent or auction site beforehand. If a viewing is available, we would recommend taking them up on the opportunity.
- Be willing to take on a project. Often the properties sold at auction will need to be renovated. You can arrange to view the property and review the Home Report in advance of the auction but you may also want to arrange your own survey to uncover any issues that might not come up on a simple home report and get some estimates for potential work before you decide to bid.
- It’s always a good idea to have builders and other tradesmen in hand so that work can start straight away, or at least get an idea of costs before making your property bid.
- Low cost or rarely available properties can be very attractive to buyers so it can be highly competitive.
Auction process
Auctions take place across the country regularly, but you do not always have to be physically present on the day. You can bid over the phone or pay your solicitor to bid on your behalf. In some cases, you may be able to bid online. The methods available to you will vary depending on the agent handling the sales auction so it is best to contact them directly. This is a good idea anyway, especially if you have never been to auction before. The agent will be able to offer advice on the process and what you should do – and allay your fears that you might accidentally sneeze and make a purchase! It’s also a good idea to go along and just observe the first time to get a feel for how it works.
On the day:
- Firstly, check that the property you’re interested in is still available on the day as some listings can fall through or be taken off before the day.
- You’ll need to bring some form of ID to the auction and typically you’ll be asked to provide 10% of the overall property price as a deposit.
- Have an idea of your bidding limit and be careful not to go over. Often people can get carried away during the bidding process so set a limit and stick to it.
- Be prepared with buildings insurance. As soon as you agree contracts to purchase the property it becomes your responsibility so make sure you have insurance ready to go so that you are covered straight away.
Search auction properties at s1homes.com to find your next potential property.