When you think of items sold at auction, you might think of jewellery, cars or even stupidly expensive collectors’ items and artworks. Your first thought isn’t necessarily homes.
However, 10,000s of properties are sold at auction every year; due to the advantages that property auctions can have for buyers in particular.
In this article, Conveyancing Partner Michelle Petersen outlines how to buy a property at auction including the advantages, how to prepare and how to get a mortgage.
Why buy a house at auction?
Buying a house at auction can be a quicker and more stress-free way of buying a home, when compared to the traditional route.
The usual purchase process takes around twelve weeks from the day the offer is accepted to the exchange of contracts, and a lot can go wrong in that time.
Whereas, at auction, once the hammer falls you have effectively exchanged contracts.
What are the advantages of buying a house at auction?
In addition to a speedy process, buying property at auction has some other benefits.
For example, once the property has been sold to the highest bidder, contracts are signed immediately and neither party can back out. This, again, differs from the traditional route which allows parties to back out even after exchange of contracts.
Although it’s unlikely that a seller would want to pull out at this stage, being bound to complete the sale will likely give you some peace of mind as a buyer!
Other advantages
House auctions also give you complete transparency, as your able to see and hear the other bids come in. There’s no pressure to put your offer in first, or at all, as there might be with other purchase methods.
Auctions can also have great deals and ‘hidden gems’. There’s a variety of options, and they’re all in one place often at a great price.
What are the risks of buying a property at auction?
In traditional property purchases, it can often be ‘first come first served’ if the buyer’s offer is acceptable. However, at auction, being the first bidder isn’t going to do you much good if you’re outbid.
If someone bids more than your budget, you’ll lose out. Or, you might, in the heat of the moment, bid more than you have – which can cause bigger issues when it comes to paying.
In property auctions, you need to have your money ready to pay a deposit on the day and will have a certain number of days to pay the full price after that. Having money at the ready might not be achievable for some people, especially if their money is tied up in property or assets.
In the full article, Michelle looks at how to prepare for and bid at a house auction, the costs involved, the legal requirements and more. Click here to read it.