The ABC of Property Auctions.
A is for Advice.
Property auctions are becoming increasingly popular, especially among first-time home buyers because of the rumoured hidden gems with bargain price tags on offer. A global real estate service provider managed to work through some sums and saw that after 2010, the value of the auction industry rose by £790 million in 2 years. Just to give you an idea, that means over an extra 2500 houses.
However, buying at auctions has some risks and we do not recommend jumping in to find that quick sale. You will need advice from people who know how to handle the process.
- Friends – If you know anyone who has bought a property this way, ask them to come along with you as a helping hand. They can stop you when you are getting too carried away, encourage you with good deals and tell you what the most important circumstances are to be aware of.
- Pre-Auction Prep – If you do not know anyone who is able to help you at the auction – or even if there is and you just want to be extra prepared – prepare your own list of advices to yourself. You need an idea of the process and atmosphere inside an auction before you join in, so we suggest sitting in on a couple in preparation for your own. Make notes as you drink it all in; what patterns can you spot, or what behaviours might come in useful at your own auction? Study these notes on the run up to your auction, reminding yourself of what to do and what not to do.
- Experts – You will find yourself in need of a trusted solicitor go over the property’s particulars and the relevant legal packs so that they can raise any enquiries on your behalf. It would also be useful to get a valuation of each property so that you know around what point in the bidding a property stops being good value.
B is for Budget.
Confirm beforehand how much you are willing to spend and make sure you take around 10% of that to the auction since you will we asked to make a deposit immediately. This is where we also suggest studying the catalogue (every auction will have one) and make a mental note of the guide prices. Decide whether they are good value and if you ask a professional for a valuation you will have an even better idea. Also, agree to the terms of a mortgage beforehand so that you know what state you are in regarding money.
C is for Caution.
There are risks to buying property at auctions. First of all, you have to acknowledge that properties are ‘sold as seen’, which means that as soon as that hammer falls, any faults you discover become your problem and will remain there until you repair or replace it.
You need to make sure that you are paying attention to the smaller details which can get overlooked while you are getting caught up in the bargain prices. This is another reason to really study the catalogue – certain language may have been used to mislead readers. Adjectives such as “interesting” or “adventurous” could have been substituted for others such as “difficult” or “risky”. We at Enlighten Estate Agents have heard of a story of a man who bought a “interesting” house at an auction, but a week later the property was torn down due a public complaint claiming the house had an unstable structure…and the buyer was left with the bill for the demolishing.
Auction houses in Birmingham have always got a schedule lined up on their website; anyone can view the timetable for upcoming auctions without having to sign up to any memberships. Some examples of auctions houses include Cottons, SDL Bigwood and Auction House, so check them out and peruse their catalogue for your next home or business venture. Usually, auctions houses have around one auction a month, but there may be the odd month with two, or maybe a month in-between, so keep your eye on those websites!
Enlighten Estate Agents actually work with auctioneers, so if you have any further questions or you are looking for some sound advice, get in touch with any of our website’s contact information and we’ll tell you everything we know: www.enlightenea.co.uk/contact.