A Guide To Buying At Auctions (Part 1)
I’ve talked about how to buy property for quite some time, but I noticed just recently that I haven’t shared with you folks the process of buying properties at an auction. That is why for the next two weeks, I’ll be guiding you through the two phases of this process.
Today, I’m sharing with you the first phase, which is preparing for auction day. Preparation is key to successful property transactions and I hope that these tips will help you make the winning bid.
Looking for the right property
In order to buy property at an auction, the first task you have to do is find out where the auctions are being held. The easiest way to find them is through looking at property magazines or asking local agents.
Another way to look for scheduled auctions is to go directly to auction houses. This is very convenient if you’re planning to buy frequently, because they maintain a regular stream of auctions and they print out auction catalogues a few weeks before the scheduled date. Some auction houses also offer mailing lists, so you can just subscribe to that service if you don’t have the time to go to their offices regularly.
Do some research on the property
Once you have a catalogue on your hand, study it carefully. This is an important phase of preparation before auction day, but it’s often overlooked by a lot of newbies in the industry.
People have this impression that going to an auction means driving to the designated place, then make a bid if you like what you see. While I can’t deny the excitement you get when you bid for houses at spur of the moment, this isn’t a smart way to spend your money. Believe me. I used to buy properties without first reading catalogues.
Back then, I was able to buy houses very cheaply at auctions, since I had few competitors for the properties I wanted. However, when it was time to move in, my family and I would encounter many problems here and there, because of some detail I failed to read in the catalogue.
After you’ve assessed the ins and outs of the properties going under the hammer, you can now ask for a viewing on the property you’re planning to bid on.
Use the viewing to determine if the facts presented in the catalogues are accurate. Ask a builder or architect to tag along during your viewing, to check the condition of the property and to give you a quote for any necessary repairs (if any).
You can also use the time to ask around the neighbourhood about the house’s history and if it’s being offered at a reasonable price.
Arrange your finances
Make sure you have 10 per cent deposit on hand during auction day, and have access to the remaining 90 per cent payment within 28 days from the time the contracts are signed.
If you need a mortgage, talk to a lender beforehand. Banks and building societies offer mortgages with friendly terms for home buyers nowadays.
There’ll be more tips in store for you next week. So make sure to watch out for the next post!