Simple Guide for BuyinG a HouSe at auction
Buying a house through an auction can oftentimes mean an incredible deal as you will be able to buy the property well below the prevailing market value. In most property auctions, the seller will be either the government, which has taken possession of the house due to tax arrears, or the lending institution when the owner stopped paying the mortgage. Despite the unfortunate circumstances in which the house comes for sale at an auction, there is a rat race to buy these houses. Here are some valuable tips for you to succeed in buying a house at an auction. Although property auctions are held regularly all over the country, the auction details are advertised only 3 to 4weeks in advance. If you plan buying a house at an auction, you must diligently keep looking into the local and national newspapers, trade journals, yellow pages and other real estate related magazines.
You can also contact all nearby real estate agents to ascertain if they have details about any impending property auctions. Take steps to have your name included in the mailing lists of local auction houses that regularly send out bulletins about upcoming auctions. Try to obtain as much information as possible beforehand from the auctioneer about the house or houses you plan bidding. It is absolutely necessary that you inspect the property before the auction date. Auctioneers generally fix a preview date during which tours of the house will be given, although quite often you may have to inspect the house on your own.
Please ask a professional inspector to accompany you to identify any significant problems that may affect the value of the home, such as faulty foundations, ceiling leaks, cracks in the walls, plumbing problems, electrical connection disorders etc. It is referable that you get an estimate to know how much these repairs would cost. You must bear in mind the cost of repairs when bidding for the house. As a rule, most houses at property auctions will be sold in as-is-where-is condition.
However much you may like a house, avoid being overly impulsive when bidding at an auction. Do not get emotionally attached to a property. Firmly decide on a maximum bidding price that is fair and reasonable well before the bidding process starts and never exceed that limit even if it means you are going to lose. If you are worried about getting carried away, take your solicitor or a stout-hearted friend along to bid on your behalf.
Never forget that bidding at a property auction entail risks as you cannot withdraw once your bid is declared successful. Penalties for backing out of a winning bid can be steep and you can lose huge sums of money. If you are new to property auctions, it is advisable you attend a couple of auctions as an observer to familiarize yourself with the proceedings. You can also if you think it is safer, bid by telephone or online.
Please know that as soon as the hammer falls in your favor you will be required to sign the contract of sale and pay the deposit. So, keep the deposit amount - usually 10%of the bid amount - ready to make on the spot payment.
It is critically important that you are fully prepared financially before participating in a property auction. Make it a point to finalize your mortgage and contact your money lender as soon as possible after succeeding at the auction to complete all the paperwork. Generally, you will be allowed two weeks to 30 days to complete the transaction.
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Published on Jun 24, 2011
Buying a house through an auction can oftentimes mean an incredible deal as you will be able to buy the property well below the prevailing m...