Buying a house at auction can be riskier than purchasing a property through an estate agent. But, if you do your homework, there are plenty of benefits to buying a house at auction and you may even bag yourself a bargain.
If you are successful at auction exchange of contracts (a legal commitment to purchase) takes place when the gavel falls and you will be required to pay a deposit straight away.
The more you know about the property you are purchasing, and the surrounding area, the better placed you will be. You should, therefore, ensure your solicitor has had sight of the legal pack prior to the auction so that they can outline any issues which may be apparent and advise you accordingly.
Before you attend the auction ensure all your finances are in place. If you require a mortgage it is advisable to have the offer agreed in principle before you make any offers. Alternatively, if you are a cash buyer you will be asked to produce evidence of such funds.
It is always sensible to check on the mortgageability of a property before bidding on it as some situations may make a property unmortgageable. Some examples, amongst others:
• Properties without a kitchen or bathroom.
• Properties with any kind of structural defect, damp, dry or wet rot.
• Leasehold properties with a short lease, typically less than 70 years, or a defective lease.
• Where planning applications have not been applied for correctly.
• Derelict property or where part of the building is in severe disrepair and needs demolishing.
• Properties of non-standard construction. Standard construction has brick or stone walls with a roof made of slate or tile, so anything that differs from this will be classed as Non-Standard.
• Some properties with sitting tenants or regulated tenancies.
Although a survey isn’t compulsory, and you may consider this to be an unnecessary expense as you will be spending money on a property you do not know whether you will successfully purchase, the sum spent will be substantially less than potentially losing your deposit. If you are unsure about the structure or condition of the property then it would be advisable to instruct a surveyor, an engineer, or your builder for advice.
Completion can take place as quickly as 20 working days after the auction which is why it is essential that you are organised. This will offer you the security of knowing you can achieve the completion date set and facilitate a smoother purchase.