Plan ahead – and make sure you have enough to pay a 10% deposit on the day
Have you ever watched BBC TV’s ‘Homes Under the Hammer’ and wanted to have a go?
There are some things you should know first.
The most important thing before you put your hand in the air and blow your savings on a total wreck is to research and plan.
Yes, boring… but it could stop you from a total property disaster.
Paul Fosh, owner of Newport based Paul Fosh Actions says: “If you come prepared and with a plan it can be a very positive and even exciting experience.”
But when that hammer falls, if you are the last bidder, the property is legally yours. You then have to pay a 10 per cent deposit at the auction and complete the sale within 28 days.
1. Find an auction
Sounds obvious, but if you have a timetable of the up and coming auctions in your area, you can plan your timetable of activity.
Online is the best way to keep informed, and many auction companies have an email list you can join for the latest auction news.
2. Find a property
Once you have spotted a few contenders within your price range, research the area throughly. And think about who you will be targeting your newly refurbished property. That includes rental rates and the ceiling price of the road.
Here, a local estate agent might be able to advise you on re-sale and rental levels for the area now and predicted for the future.
Plus, you can search for local sold property prices on websites such as Zoopla and Rightmove.
This is especially important, as guide prices are usually set fairly low to tempt people to the auction.
3. Visit the property
Viewers of Homes Under the Hammer will know that people turn up to an auction and bid and buy a property just from the catalogue picture with frightening regularity!
Arrange a viewing to see a number of potential properties you can afford, so if you get out-bid on one and your money is burning a hole in your pocket, you have a back up.
This should eliminate the temptation to part with thousands of pounds on the basis of a tiny catalogue photo.
4. Get expert advice
Visit the properties more than once and take a surveyor or trusted builder with you on one of the viewings to give you an estimate of the work that needs doing.
They can also spot defects that you may not have noticed.
Get the legal pack of the properties you are interested and have your solicitor check the details for any extra costs you might have to pay or any covenants attached to the sale.
5. Be quick
You will have to act fast though, as the average time between catalogue publication and the auction is four weeks.
6. Do your budget
You absolutely must have a 10 per cent deposit with you on auction day. You then have 28 days to complete the sale or you will lose your deposit and the property.
A chat with your mortgage advisor to gain a mortgage in principle is the best way to go, unless you have thousands of pounds under the mattress or down the back of the sofa and can pay in cash.
Also consider what level of budget you need to do any refurbishment work, include a contingency figure and then double it! And don’t forget to add in a bacon butty budget for the builders.
7. Be there
If it’s your first time and feel a bit overwhelmed, then do a ‘dummy run’ at another auction first to see how they run and get a feel for the experience.
You can always bid via phone using a member of the auction team or by a written proxy bid to the auction house, but where’s the fun in that?
You will need to register when you arrive at the auction where you are bidding.
Get there early and grab the best seats.
Then be there and put your hand in the air firmly and with purpose so the auctioneer can see you’re bidding and not just scratching your head.
Have a maximum highest bid that you can afford to go to and stick to it. Being in the auction atmosphere and feeling competitive can make your bid way beyond what makes financial sense.
8. And finally…
If the property you are bidding on does not meet its reserve, you may be able to negotiate separately with the auctioneer acting as agent, after the auction.
Then go and enjoy your new property – maybe we will see you on Homes Under the Hammer soon?