The Pros and Cons of buying at Auction
THE PROS AND CONS OF BUYING AT AUCTION
THE DOWN SIDE THE UP SIDE
Pressure, pressure, pressure.
You will be up against the clock. There are a maximum of four weeks between catalogue publication and date of auction. There's no time to hang around. Speed.
Houses sold at auction are not part of a lengthy chain. Once the gavel goes down, the house is yours. You pay 10 percent of the price on the day and the balance within 28 days.
Homework is required.
Auctions are a great way for sellers to dispose of hard-to-sell houses or properties with serious structural problems. Don't get caught out. A simple valuation will not pick this up. A full survey will but these are expensive.
It is still possible to bag a bargain. Many sellers want a quick sale and are prepared to sell at less than the market price.
Money for nothing.
Because you have to get your surveys, valuations, conveyancing and mortgage sorted out before the sale you could be out of pocket to the tune of hundreds of pounds and there's no guarantee that you'll be the successful bidder.
The bidding process is open; you know exactly what you need to bid to secure the sale.
The stress factor.
There's much more uncertainty and the method of buying a property isn't for everybody.
You cannot be gazumped.
There's no cooling off period. Once you've entered into a binding contract with the vendor and you have 28 days to complete. Flexibility.
Sometimes if the reserve is not reached, a property is withdrawn, but if you are among the last bidders on a withdrawn property it is possible to approach the agent with a price and if see if the vendor will accept the offer the after auction is over.
Lawyers on the prowl.
If you do change your mind, you'll lose their deposit and could be sued by the seller for their costs and the difference in price if they sell the property for less than the price you originally offered.
Some vendors will sell a property in advance of an auction. This saves them money and you time.
Repossessed houses or property that belonged to a debtor can cause problems as you may be contacted by your creditors. You may have problems getting credit as the previous owner's details may appear on the records of credit reference agencies. If you are in any doubt, visit www.experian.co.uk for a free online UK credit report and information on how to change it if it is incorrect.
Because unusual properties such as churches and fire stations are almost impossible to value, an auction is often the place you'll find them for sale.
You have to have sold.
If your purchase will only be enabled by the sale of your current property, and this is still unsold, you not bid for auction.
The great unknown.
What you pay will depend on who is there on the day bidding against you. You may be lucky and be the only bidder; you may be part of a bidding battle.
The property you have your eye on may get withdrawn from sale or sold prior to the auction, leaving you out of pocket.
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