With London’s property prices sky high, auctions can be a good way of finding bargain-price property, with the advantages of becoming the owner overnight – avoiding many of the lengthy processes involved with purchasing property the usual way. However, bidding with large amounts of money is not for the faint-hearted! Here are some tips and considerations for the would-be bargain hunter.
Before you start looking for auctions and properties to bid on, think carefully about what you want to achieve. It can be difficult to make a profit on renovating derelict or run-down properties, and you’ll need to bargain hard and be very thorough in your research to stand a good chance of doing so. If you’re looking for a chance to truly put your mark on a house, though, buying a run-down property at auction can be a great choice. This allows you to use the money saved from purchasing a regular house to transform it into your dream home.
You should never just turn up to an auction house without having first investigated the properties which are up for sale. Request the auction catalogue as soon as it’s available, read it thoroughly, and use it to identify which properties would be of interest to you. If something catches your eye, always bear in mind that guide prices are set deliberately low to entice buyers, and you can expect to pay a minimum of 10% over it.
Next it’s time to find out what you would really be getting yourself into. Many properties at auction require extensive work, so it’s vital that you have a clear understanding of how much it would be worth once brought up to standard. You also need to know how much that work would cost, and the maximum you should be willing to pay for the property in its current condition.
Research the property, and its area, thoroughly. Find out what similar properties in the area tend to sell for, and look into the area’s schools, transport links and crime rates to see if it’s really a wise investment. If you plan to live in your purchase, this will help you decide if you would like the neighbourhood. Make sure you view the property, preferably more than once. You would be well served to pay a surveyor to evaluate it. If you discover major structural problems after you’ve already bought it, your bargain buy could turn into a costly catastrophe. Consider taking a builder along too, so you know how much extra money you’d need to spend on it to make it liveable.
If you’re really intending to buy, make the appropriate financial arrangements beforehand so you are confident that you can cover the cost of the property you want. Once that gavel comes down, you’re the owner, and if you can’t pay the whole balance due within 28 days you’ll lose your 10% deposit. As for the deposit itself, if you bid on something and then can’t pay the deposit straight away, you could be sued by the vendor! If you need a mortgage, discuss it with a bank or building society before the auction and arrange one in principle.
Take two forms of ID, your cheque book and your banking details with you, and try to arrive early. You may need to register, and if there is one available, make sure you get a copy of the addendum sheet. Some of the properties, including ones you’re interested in, may have been withdrawn or sold already. Find a seat where the auctioneer will be able to see you easily and don’t be too subtle about trying to make your bid. If you are really keen on a property, it may be worth seeing if you can put an offer in for it before the auction has even started, and save yourself the trouble of bidding against other people.
Auction day can be a pulse-pounding affair, but make sure you don’t lose your head! Think hard about what the upper limit to what you can spend is, and stick to that budget. If you go over too much, you may find yourself unable to fund the full amount and lose tens of thousands of pounds from the deposit, which is due as soon as your bid is successful.
Sometimes a property will fail to meet its reserve price, but this isn’t always the end for your hopes of becoming the new owner. The auctioneers can still act as agents, and with their help you may be able to strike a deal with the seller at the end of the lot. This is a good way to get a property at a bargain price.
Landmark Lofts is part of the Landmark Group - the only group in London specialising in the project management of loft conversions, extensions and refurbishments to include a Chartered Building Company (CIOB), Chartered Architectural Practice (RIBA) and to be regulated by the Royal Institution of Chartered Surveyors (RICS). The Landmark Group specialises in the project management of loft conversions, extensions and refurbishments.