What You Need to Know About Buying a Home at Auction
Buying properties at auction can be profitable, but they can also be a financial nightmare. Naturally, this isn't a process for everyone. The only way you can decide if buying a home at an auction is for you is to learn more about doing so.
People Can Buy Before Auction
Depending on the situation, it is possible for people to buy a property before it goes to auction. That means that you could spend a lot of money on surveys and reports, only to find out that it was all for nothing. This can happen in extenuating circumstances, and its happening will often depend on the reason for the property going to auction and the buying price outside of it.
That also means you could go through this route. Think about your wants and the guideline price, and then determine your offer. Buying before the auction could help you secure the home without bidding on it.
Bear in mind, most homes put to auction are in the process of foreclosure. If the owner can make the updated payment to the lender, then he or she can stop the auction from taking place.
You'll Still Need to Visit
Arranging viewings of auction properties is possible and well advised. This will give you an idea of the setting, of any extra work that needs to be done, and any issues with neighbors or the area.
Don't skimp on the surveyor report either. These properties can have hidden electrical and structural problems. The last thing you want is to lose money because of a mistake.
You'll Need the Local Value
There are two values that you want to find out before bidding: the home's current value and the potential value. The current value will likely tell you more about issues surrounding the home and the sale.
The value and potential value are both guides to work with for your maximum bid. Finding these out will help you avoid losing out on money in the future, especially if you're an investment buyer.
If you want to rent the house out afterward, find out the details of your yield potential. This will also help you set your maximum bid.
You Can Get the Legal Details
Homes at auction generally have legal packs that you can get access to. Have your lawyer look over them to make sure everything is standard and as expected. Most legal packs will detail the plot, any expectations you can have once you have bought the property, and limitations to extending or repairing elements.
Buying a property is a major financial decision, even when you buy at auction. Keep these factors in mind when you're buying to avoid a financial pitfall. Consider working with a real-estate agent and a lawyer so that you can make sure you have all the information you need.