Are you looking for find a property that you can profit on? Perhaps you are looking for a new home for a decent price. Have you ever considered buying a property at auction? Many properties that get sold at auctions are owned by lenders due to foreclosures, repossessions, or who’s former owners passed away. These homes are still very livable! However the mortgage lender is looking for a quick sale and that can lead to a great deal for you.
Finding an auction
As auctions tend to cater for property professionals, rather than the general public, advertising and awareness of auction houses is limited.
A good place to start is looking through the telephone directory, yellow pages or searching on Google or Yahoo.
Another good tip is to keep an eye out for For Sale signs outside homes. Where the board says ‘for sale by auction’, call the telephone number provided. You will either get through to an estate agent acting on behalf of the auction house, or you will get through to the auction house directly.
If you get through to an estate agent, ask them for the contact details of the auction house. The estate agent may be reluctant to do this, so it is worth being persistent.
Once you are able to make contact with the auction house, ask to be put on their mailing list. Although there is likely to be charge for this, you will begin to receive details of properties due for sale.
Before you bid
Having identified the property that you want to buy, you will need to arrange finance. For most people this will mean approaching a mortgage lender. It is important to do this in advance of the auction.
Remember once you win a bid, you are legally bound to purchase the property and you need to be able to pay within a set number of days.
The mortgage lender will require a basic valuation of the property. It is advisable to invest in a full survey as the property may be at auction due to structural problems, which the basic survey would not pick up.
Before bidding for your desired property, you may want to attend a few auctions to get a better idea of the experience.
Winning your bid
Set yourself a price limit, but do not get carried away and bid beyond it. If you had a valuation done, you will have a good idea of the market value. You should not go above the amount agreed with your mortgage lender.
If your bid is successful, you will be legally bound to purchase the property. You will need to put down a 10% deposit of the property’s selling price. A contract will need to be signed. Normally, you would have seen this before the auction and the seller will be legally bound to complete on the day.
Finally you will need to pay the remainder of the selling price within an agreed period, such as 28 days.
Congratulations, you have just picked up an auction deal.