4 Auction Property Buyer Mistakes to Avoid
Buying at an auction in Scotland can be a daunting experience and it’s often tempting to jump on a potential purchase without taking the time to ensure it’s the right decision. We’ve taken a quick look at auction property buyer mistakes to avoid.
Read on where we take a look at 4 quick tips for things you should definitely not be doing when buying at an Auction;
Relying On A Mortgage
When buying at an Auction, the standard timeframe for completion is 28 days. In the vast majority of circumstances, this isn’t enough time to get a mortgage. This can even be tight for arranging bridging finance unless you are well prepared.
As soon as the hammer falls and your offer is accepted, you are committed to completing in this timeframe. Failing to do so provides valid grounds for the seller to withdraw and you will lose your deposit.
There are specialist finance brokers and lenders who can cater for auction purchases. However, you will need to be well prepared and these often do come with a premium price.
The best solution for this is to be a cash buyer. You can always refinance onto a mortgage product at a later date. This is particularly efficient when you are refurbishing to add value to the property. You can then seek lending at the higher figure and release more cash to go again.
If you do want to explore finance options and want an introduction to a great broker, get in touch here.
Skipping The Auction Property Pack
The Auction Pack is a vital document to have a solicitor inspect before considering any purchase. It will contain key information regarding the Title of the auction lot along with highlighting any red flags to look out for. This will normally contain the following;
Official Copy of Register of Title (Office Copy Entry)
Land Registry and Local Searches
Special Conditions of Sale
Property Information Form
Fixtures and Fittings Form
Management Information
Leases
Tenancy Agreements
Planning Permission Documentation
Do not presume that you have enough knowledge and experience to inspect this yourself and if the pack is not available – DO NOT BUY!
Ensure you seek good legal advice before entertaining any auction purchase, if you want an introduction to a trusted solicitor, get in touch here.
Trusting The Home Report Survey For Auction Property
This is a document that tells you what you need to know about the house. It’s split into three parts – a single survey and valuation, a property questionnaire and an energy report.
If the Home Report Survey hasn’t been carried out by a reputable and trusted company then it’s really not worth the paper it’s written on. This can be extremely detrimental as inflated valuation figures can encourage you to overpay for the property. Also, there could be key details missed such as structural issues and dampness. These aspects will be a very expensive fix.
Take the time to research what Surveyors are on the panel of the big-name lenders and if it’s not one of them, don’t rely on it.
You can find a list of all qualified RICS chartered surveyors here.
Waiting For The Live Auction
If you decide to wait until the live auction, all you are doing is allowing the competition to catch up! It seems to be a little know fact that in the majority of cases, you can offer on a property at any point and enter negotiations if required. Just remember, the usual conditions of an auction purchase still apply so have your deposit and solicitor ready!
The other drawback of a live auction is that the Auctioneer has the authority to bid on behalf of the seller up to the reserve price. What this means is that you could be getting into a bidding war with the plant pot in the corner of the room! Don’t make the mistake of sitting in the front row with your eyes fixed on the auctioneer. The experienced auction property buyer will be standing at the back so they can get a full view of the other bidders.
Take notes. It will always appear that the majority of properties are sold in a live auction but I can assure you this isn’t the case! Write down the prices that any “provisional offers” were accepted at. In most situations, this is where the auctioneer has been bidding on behalf of the seller to drive towards the reserve price. Where this hasn’t been successful, the auctioneer will strike the hammer as sold but announce it is provisional. A savvy auction property buyer will know, this is one bid away from the reserve price and use this as a point of negotiation for an offer out with the live auction.
Summary
Remember, making an offer at a Scottish property auction is your choice and yours alone! I repeatedly hear of people making poor decisions, getting stung and then trying to blame the auctioneers. Do your own due diligence, take advice from your solicitor and have exit strategies as a safety net if Plan A doesn’t work.
There are fantastic purchasing opportunities to be discovered through Auction but you need to be well-organised and critical in your due diligence. Keep an eye out for auction listings on property portals such as Rightmove, Zoopla and OnTheMarket.com. Also, reach out to auctioneers directly, I’d be happy to introduce you to some trusted partners.
If you are interested in growing a property portfolio then we can help. Book a discovery call via our website www.theportfoliobrokers.com or email us at in**@th*****************.com to get started.
Good Luck!
