Property auctions can be stressful places. With a large amount of money changing hands in a short period of time, preparation is the key to a smooth and successful experience. Here are a handful of pointers on how you can ensure you enter the auction room equipped with the best chance of walking away with the deeds of the property that’s right for you.
Do your homework
It’s always beneficial to learn as much as you can about a property before buying, whether in an auction house or elsewhere. This allows you to make an informed decision and weigh up all the factors, including the building itself, its surrounding area and the amenities nearby. It’s also a good idea to ask yourself if you’d still be interested in purchasing if the property wasn’t at auction. If not, steer well clear.
Visit the site in person
Visiting the property in the flesh should be a minimum requirement for anyone looking to invest in it, and ideally you can have a surveyor assess it in detail prior to the auction. In the case that any structural issues are discovered after the purchase has been completed, it may be difficult to get adequate insurance cover, which could make securing a mortgage difficult as well. Again, an informed decision is always a preferable one.
Read the legal documentation
All properties sold at auction come with a pack of legal documentation and it’s advisable for you to read this through from cover to cover. Ideally, you can have your solicitor check over the documents as well, since these may contain clues as to why the property did not sell on the open market (due to legal peculiarities or other extenuating circumstances).
Source a financing agreement beforehand
If you know that you will require financing in order to complete the purchase of the property, it’s a good idea to source a suitable lender prior to the auction taking place. Try to get an agreement in place – even if it’s only an agreement in principle – since this will equip with you the knowledge that you can access the requisite funding (thus allowing you to bid with confidence) and set the wheels in motion for the application process should your bid be successful. If you’d like to speak to a professional advisor about sourcing an agreement in principle, we’d be happy to help you do so.
Consider other options ahead of a bridging loan
Bridging finance is sometimes referred to as auction finance, meaning many people automatically assume that it’s the best (or indeed only) method of financing open to them. While they are certainly a speedy way of raising the capital necessary to close out an auction purchase (which often come with a 28-day deadline), they are also expensive in comparison to a conventional mortgage. If you do your research, you might find a mortgage provider who can process and approve your application within that tight timeframe, eliminating the need to resort to a bridging loan. We can help you find such a provider.
Choose your solicitor wisely
Some solicitors have more experience in property auctions than others, so it’s wise to choose one who has handled these kind of investments in the past. Not only will this ensure that they are equipped to process things within the short window of time mentioned above, but it will also ensure that they are comfortable working alongside another solicitor (something that is often insisted upon by lenders, especially those which provide bridging finance).
Don’t go above your budget
The competitive atmosphere of an auction house can be a temptation to keep on bidding until you win – but if you go above the threshold agreed upon with your finance provider, you might find that you’re unable to borrow the total sum required to complete the transaction. Work out the maximum price you can afford to bid before the auction date and stick to it.
Contact us now to discuss your personal options, Revolution Finance Brokers specialise in commercial and residential finance in Essex, Kent, London and Hertfordshire.
