Cons of property auctions
- It’s easy to go over your budget.
The excitement of bidding, not to mention the intense desire to get your house, can make you go over your budget. Unfortunately, the last bid is binding and you can’t change your mind once the hammer has fallen on the sale. And then, not only have you paid too much for the house, but you still have to pay stamp duty and solicitor’s fees and surveyor’s fees, and you probably have renovation costs ahead of you too.
- You are responsible for checking the property to ensure that seller’s surveyors, inspections and valuations are accurate.
As soon as your bid is successful, you become responsible for the property, including all damage, whether you are aware of it or not. You want to know exactly what you’re getting in to, so it’s essential that you visit the property yourself and get an independent surveyor to come in and give it a thorough inspection. The seller is required to get a property valuation, but it’s always a good idea to check the results yourself.
- Your financing must be finalised.
When you buy a property at an auction in the UK, you need to pay a 10% deposit upfront and the remaining 90% within 28 days. So, you need to have arranged for your money to be immediately available. You will need to tell your mortgage provider that you intend buying a property at an auction during the application process, so special arrangements can be made. You snooze, you lose.
Actually, that’s a little unfair, because you could lose out on the property through no fault of your own. Sometimes, interested parties approach sellers with an offer before the auction. The offer may be accepted but the lot may not be removed from the list in time. This means two things:
- If you really want to buy a particular house, it pays to approach the seller beforehand, and
- Always check with the auction house to see if there are any changes to the listings.
In the end, there are more people who are satisfied with the houses they bought at auction than those who feel that they have been done in. Typically, the pros outweigh the cons. So, do your homework, stay calm and enjoy yourself; you could walk away the proud owner of your dream home.