It doesn’t matter who you are or what your background is, when buying property you just want to get the best possible deal – in other words you want to pay as little as you can for the highest possible quality.
That’s just common sense. The law of Supply and Demand is as valid in property sales as it is with any commodity, and whereas demand for a particular piece of property may remain the same whatever the economic climate, it is governed by the supply of money. If the financial institutions hang on to their money in a tight fist, as they have been doing for the past several years, then the property market can become stagnant. This is a guide to buying property at auctions. Broadly speaking there are three distinct ways of buying property.
- Through an estate agent as an intermediary
- Through a private sale using direct negotiation with the owner
- Through a property auction
Property auctions have been steadily gaining in popularity over the past several years when compared with the other options of property buying.
Many of the properties that come up for auction do so because the owner wants or needs to sell the property with as little delay as possible.
There can be a number of reasons for this:
- The owner could be emigrating or otherwise relocating
- There could have been a bereavement, illness, divorce or separation in the family
- The property could have recently been inherited and is unwanted
- The owner could be having financial difficulties and wishes to avoid repossession
Other properties that appear on the auction floor could well have already been repossessed by financial institutions.
The set of circumstances that cause a property to be put up for auction frequently mean that at the fall of the hammer the selling price can be well below the property’s true value, often by as much as 60%, offering a substantial saving to the winning bidder. Of course in practice one never knows this figure until the fall of the hammer.
There are a number of other advantages in buying property at auction. If the property happens to be one that has been repossessed by a financial institution, the latter will be responsible for paying all outstanding rates and taxes, arrears, and you will not have to pay any transfer duty.
Potential bidders should check with the auction house about Conditions of Sale.
You will have to register with the auction house and be approved as a bidder. This will entail proof of your identity and of your address. If you intend making use of a mortgage then you may need proof of “pre-approval” from a financial institution. Potential buyers should always ensure that they know what they are bidding for before the auction takes place, and you should arrange to look over the property so that you have a clear picture of what you will be bidding for.
You’ll find that most auction houses require their commission, usually 10%, to be paid at the fall of the hammer, as well as a deposit of 10%. If after that you are unable to go through with the purchase, which usually involves payment of the balance within 28 days, then your deposit may be at risk.
These fairly strict conditions of sale ensure that an auction sale is fair to the seller and fast to the buyer, thereby making it possible for SERIOUS, well prepared buyers that snatch up great deals!
There is no doubt whatsoever that there is a bargain at every property auction, particularly at “Multiple Property Auctions” where purchasers are spoilt for choice and are and afforded various opportunities to secure fantastic price advantaged acquisitions.
It’s this simple, the bigger the auction the better the opportunities for buyers to snatch properties up at a steal. To ensure you are the one who secures the bargain you need to take decisive action, equip yourself with accurate knowledge on auction rules& procedures, align yourself with a market maker, be well prepaired with regard to funding.
Once you have done the above you are ready to profit from this extremely lucrative industry
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