Lucy Alexander, presenter of long-running BBC1 TV show Homes Under The Hammer, property auction expert and developer, should know how best to negotiate the relatively risky world of auctions.
Buying a property at auction is both exciting and potentially profitable. I love the process; it avoids all of the lengthy purchasing procedures that you usually have to endure and the risk of everything falling through at the eleventh hour. At an auction, as soon as that hammer falls, that’s it - the property is yours. But it isn’t to be undertaken lightly and it pays to do some research.
You’ll need to find out when and where there is an auction. You can do this by scouring the property papers and magazines, or by speaking direct to a local estate agents.
Once you’ve found an auction, next get hold of its catalogue and spend time studying it. I have known people who turn up at auctions with no knowledge of the catalogue list and bid on properties on the spur of the moment. This may sound like an exciting and even brave thing to do, but in my opinion, while you might occasionally get lucky going on instinct, it is always better to be prepared.
Once you’ve identified the properties you’re interested in, contact the auctioneers and arrange a viewing. As when buying any property, I would advise more than one viewing as you need to be aware of every facet of the property if you are considering bidding. Very often, auction properties are in a poor state, so it is advisable to take a builder or an architect with you to find out what can be done to the property, and how much it is likely to cost.
It would be prudent to remember, though, that time really is of the essence. There is usually four weeks between the publication of the auction catalogue and the auction, so you have to act fast.
Make sure that you do your research thoroughly, and compare the price and condition of the property to others that are similar or that might be for sale with local estate agents. You will very find that the guide price of auction properties is set relatively low in order to entice bidders, so have in your mind what you think the true market value of the property is, and bid accordingly.
When you express an interest in a property to the auctioneers, there is usually a legal pack available for you to read. It is essential that you digest this thoroughly, and if you’re not sure about anything, have your solicitor check it out. It could contain covenants or certain legalities which could have potential implications on the value of the property. It might even pay to carry out property and land searches of your own if you have any concerns and if you have the time.
You will also need to make your financial arrangements prior to auction. You must have a ten percent deposit with you on auction day, and you must come up with the remaining ninety percent within twenty eight days.
When you arrive at the auction, you’ll need to register - make sure that you bring identification and enough funds for your ten per cent. Ultimately, whilst it can take time to do your homework prior to auction, and it is admittedly pretty nerve-racking actually taking part, I believe that nothing beats buying a property at auction. I have recently purchased a house at auction myself, which I am currently renovating before it becomes our family home.
The thrill and euphoria at having a bid accepted, and knowing that it is a legally binding deal, is just fantastic, and if you’ve done your research correctly, then you might just end up getting yourself a bargain in the process.