Buying Repossessed Property at Auction

It’s always exciting to go to an auction but property auctions are very serious events. One wrong move and you could accidentally bid for a property you don’t want, or worse still buy a property you don’t want and can’t afford. If you are thinking of purchasing repossessed properties at auction then you’ll want to remember the following advice.

Get an Auction Catalogue in Advance and Visit the Properties

Repossessed properties come to auction in all kinds of conditions so you need to visit the properties you’re interested in before the auction day. The best way to do this is to get an auction catalogue in advance and go through marking the repossessed properties that interest you. You can then make appointments to visit each. Remember that looks can be deceiving so don’t be scared to root around each of the properties, and you may even want to take a builder with you to judge the overall condition.

Attend a few Auctions Before your Own

It is important to get a feel for the auction atmosphere before actually participating so attend a few property auctions before the one you want to bid at. Find out how the bidding process works, what happens after you purchase a property and what the competition is like. This will then give you a good idea of what will happen on auction day and stop you looking like a complete novice.

Don’t Forget your Important Documents and Deposit

If you do end up buying one or two repossessed properties at auction you will be required to pay a 10% deposit for each property immediately (check the exact percentage prior to the auction as some auction houses ask for more than 10%). This can be paid in cash or in the form of a cheque.

The remainder of the balance is then payable in 14-28 days (again this depends on the auction house). If you are paying cash for the property you will need to provide proof that you have the funds and can access them before the deadline. If you are paying with a buy to let mortgage though, you’ll need to produce a ‘mortgage promise’ for an amount equal to or greater than the outstanding balance. Make sure you arrange a mortgage in principal before going to auction.

A Winning Bid is a Contract

If you bid on a repossessed property at auction and win you immediately enter into a contract to purchase. You can’t later rescind the bid and say it was made by mistake; you are legally obligated to buy. The seller can pull out of the sale but you can’t so make sure you definitely want the property before bidding.

So, now you know the important points of buying repossessed properties at auction you can go along and bag a bargain. Just remember, view in advance, finance in advance and don’t get carried away.