Tips for first-time buyers at auction10.10.2017
First-time buyers face huge challenges in today’s market, but there is great opportunity in the auctions sector which many overlook. Property auctions are ideal for first-timers: lots are often priced below market value, there are no hidden surprises, all costs are transparent and once the hammer lands, the property is yours. Auctions provide real opportunities for first-time buyers to get a foot on the property ladder, and yet, the actual process is still a mystery for many.
With this in mind, Nick Muston FRICS, award-winning auction and investment expert at Austin Gray, shares his top tips to help first-timers get on the property ladder.
Do your research
We can’t stress enough the importance of research, also known as due diligence. If you find a lot that you like, which is well below market value, it’s crucial to find out why it is offered at a discounted price. We pride ourselves on selling high-quality lots, but it’s still worth checking what needs updating in the property to please a mortgage lender.
Every auction property comes with comprehensive legal documents, known as the legal pack, that outline any special conditions, but we recommend that you obtain legal advice before bidding. Legal documents can be downloaded free of charge from the Auction House Sussex website.
Check you have the finances
Whether you’re a cash buyer or you need a mortgage, make sure you have a 10% deposit which you can easily access, alongside any associated costs like an administration charge and buyer’s premium.
Register your interest
Every event is free to attend, but we do ask that you register your interest on a chosen lot before the day. This is simply to set up a line of communication if the lot is sold prior or is withdrawn.
Get a mortgage arranged in principle before the auction
A plentiful supply of mortgage funds means that buyers now have a choice of tempting packages, some of which can be issued within just two weeks. It is important to get a mortgage arranged in principle before attending the auction, so start as soon as possible. You will need to clarify the terms of an auction, notably the 28-day time frame from bid to completion, beforehand. You’ll also need to bring ID and proof of address on the day, as well as details of your solicitor and payment method, like a credit or debit card.
Note: If you are signed up to a Help to Buy Isa, you must have a mortgage on the property to receive the bonus. To become eligible, your solicitor will need to apply for it before completion.
Set a limit
Buyers without a clear pricing strategy in place, i.e. knowing what they can afford, can forget about their budget. Bidding can be over within a matter of minutes, so it’s important to stay focused on your budget.
If you want to get a feel for the auction room, attend an auction in your area without bidding. Alternatively, get someone to bid for you or bid by proxy if you think that nerves will get the better of you.
Position yourself for success
Grab a seat near the front in clear view of the auctioneer so you can easily signal a bid. A seasoned auctioneer will be able to differentiate a bid from a nose scratch, but developing your own bidding signal helps others to identify your bids – and when they’ve mistaken a shuffle in your seat for a bid!
Prepare for completion
Completion is when the money is transferred and you get a set of keys to move in! It is generally four weeks after your winning bid at the auction, when contracts, a deposit, and fees are exchanged. If you’re a first-time buyer, you won’t have the additional burden of a property chain stalling the process, you just need the remainder of the purchase price and fees to seal the deal.
And remember...once the hammer falls, by law, the property is yours!
Whatever your concern or query, please don’t hesitate to get in touch with our team on 01273 201989, or email us at email@example.com.