The Smart Way to Buy at a Property Auction

25 July, 2024 4 minutes reading time

Property auctions can be an exciting and potentially lucrative way to secure your next home or investment property. With the fast pace and unique rules, getting caught up in the Moment and making hasty decisions is easy. However, with the right approach, buying a property at auction can also provide great opportunities. To help you navigate this process successfully, here’s a quick list of the dos and don’ts of buying at auction.

Essential Do’s

1. Do Your Homework

• Inspect the Property. If possible, try to see the property more than once and check it out at different times. This approach will not only give you a greater understanding of its condition, but you will also better appreciate ambient noise levels and natural light. Attend open houses to get a feel for the layout and flow.

• Reviewing the Property Pack is a critical step. The pack is a comprehensive document and a treasure trove of information detailing the property’s legal status, boundaries, planning permissions (or restrictions), and any known issues. Instruct a specialist property lawyer to meticulously review this pack with you so you fully understand the implications.

• Research the Area. Don’t just focus on the property itself. Look into the neighbourhood’s amenities, schools, transport links, crime rates, and future development plans. An in-depth analysis will give you a clearer picture of the property’s potential long-term value, which is crucial for making a sound investment decision.

• Get a Survey. A professional survey is recommended and essential when buying a property at auction. A surveyor can identify hidden defects, structural issues, or potential costly repairs that might not be obvious to the untrained eye.

2. Set a Realistic Budget

• Maximum Bid. Before you start bidding, set a firm budget and stick to it. Your budget should cover the potential hammer price, auction fees, legal fees, and stamp duty land tax. Furthermore, you should factor in any potential refurbishment or repair costs that the property survey might uncover, such as a new roof or plumbing issues.
• Secure Financing. If you rely on a mortgage, get pre-approved by your lender. Pre-approval will give you a clear idea of what you can afford and ensure you can move quickly if your bid is successful.

3. Prepare for Auction Day

• Registration. Arrive early and familiarise yourself with the auction process and rules.

• Bidding Strategy. Plan your bidding strategy. Decide on your opening bid, increments, and maximum limit. Consider if you’re comfortable with a slow and steady approach or making a bold move to scare off other bidders.

• Stay Calm. Auctions often stir up emotions. Don’t let the excitement cloud your judgment or lead you to overbid. 

Key Don’t’s

1. Don’t Bid Blind

The legal complexities of auction purchases can be overwhelming. A thorough review of the property pack is essential. A lawyer will advise you on potential issues or risks.

2. Remember Additional Costs

The winning bid isn’t the final price. Account for auction fees, stamp duty, legal fees, and any potential repair or renovation costs. Remember, additional costs can significantly increase your overall budget.

3. Remember the Auction Terms

Read the auctioneer’s terms and conditions carefully. Understand the deposit requirements, payment deadlines, and special conditions that could affect your purchase. This understanding is crucial to avoid surprises or misunderstandings during the auction process.

4. Please Don’t Get Caught Up in the Moment

It’s easy to get swept up in the excitement of an auction. Stick to your budget, avoid impulse bids, and be bold and walk away if the price exceeds what you’re willing or able to pay. 

Our Advice

Buying a property at auction can be a smart way to find a great deal. However, having the correct information and support is critical to a successful purchase. We’re here to answer your questions and guide you through the auction process. If you’d like to discuss buying a property at auction or have any other property-related questions, please get in touch with us today. We’re here to help.

Please note that all views, comments or opinions expressed are for information only and do not constitute and should not be interpreted as being comprehensive or as giving legal advice. No one should seek to rely or act upon, or refrain from acting upon, the views, comments or opinions expressed herein without first obtaining specialist, professional or independent advice. While every effort has been made to ensure accuracy, Curtis Parkinson cannot be held liable for any errors, omissions or inaccuracies.

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