Buying a house is an exciting but also stressful one if things don’t go to plan. Before you even start your house search, you have a lot of things to think about.
There’s also the matter of preparing yourself financially for the purchase. House-hunting usually comes with many years of saving and planning. But after you’ve successfully racked up your funds and given yourself a friendly budget, you’ll be in a position to look for a house that you love!
When it comes to house-hunting, there are so many different ways to buy and search for houses. Nowadays, the most popular ways people buy houses are through property portals. But there are other options that most people overlook.
By using as many options as possible, you increase your chances of finding a house within your budget and works for you. One of these ways of finding and buying houses is through auction houses.
Some people may see auction houses as ‘old-fashioned,’ but it’s still a valid and helpful way of buying property.
To help you understand how auction houses work, we’ve put together an explanation of auction houses and their benefits.
Property auctions are still very popular, and many homes are sold by auction each year. They’re more popular with property developers and investors, but they also have benefits for regular buyers.
Around a month to two weeks before the auction date, auction houses will release their catalog of properties. The catalog has a complete list of all the properties that are going to be auctioned.
There will be two critical prices you need to make a note of if you’re interested in a property. The guide price is what the auction house believes the house is worth and should sell for. The reserve price is the lowest price that the seller will accept.
The auctioneer will offer houses up to be bid by the buyers in the room. Just like any other auction, the highest bidder will win the auction. If you win the bid, you’ll have the opportunity to buy the house at the prices you offered.
The process of buying at an auction house will typically be a lot faster than buying a house through traditional means. Using an estate agent to buy a house can take many months of viewings and negotiations.
When you use an auction house, once you submit your bid, you’ve already agreed on a price with the seller and go on to sign contracts. You will have legally bought the house in only the time between the auction house releasing the catalog and the auction date. This is only around a few weeks compared to a few months.
You can also find a great house at a bargain price. If you get lucky enough, you can find a house you love that doesn’t receive much interest; you can get it for a meager price. The possibility for huge bargains draws a lot of people to auction houses.
The process is easy to understand. Using auction houses isn’t complicated, and many investors love the simplicity of the process. All you need is your ID, a solicitor, and a way of paying the 10% deposit after the contract is signed. If you have these three things, you’re already prepared to buy a house.
Although it’s pretty easy to use auction houses, you can make a few dangerous mistakes if not experienced.
Once you’ve gone through the catalog and have found a house you’re interested in, make sure you book a viewing. You don’t want to go in blind and find out the house has all sorts of issues after buying it.
To follow on from your visit, commission a survey for the house. A survey makes sure there are no issues with the house that you cannot see from the viewing. A dangerous house is not a house you’ll fall in love with!
The unique thing about auctions is that prices can multiply very quickly. The guide price given by auctioneers is purposely set low to try and gain more interest from buyers. It will usually sell for more than this. Be prepared for this and make sure you don’t blow your budget- after the hammer comes down, that property and the price is your responsibility.