You can get some great bargain properties at auctions. Here is your guide on buying a house at auction, if you are a first time buyer.
Home buying is an important decision in a person’s life. Naturally, one invests a fair amount of time and efforts in researching before buying. However, sometimes, a lot of time is wasted in the entire procedure and you may lose out on a good opportunity. Besides, many a time there are delays on the part of seller, during which time you may find yourself without a house to live. In some cases, a seller may decide to sell his house to a higher bidder while in other cases he just withdraws his offer. Such things can cause a lot of frustration to a potential homeowner. The best way to overcome these problems is buying a property at auction.
How Do You Buy a House at Auction
One can find a range of properties at auction. Some of these properties are repossessed by mortgage lenders, while others are put under hammer for quick selling by their sellers. Repossessed properties may not be in a good condition as mortgage lenders do not waste time and money in sprucing up these houses. Some of them are in downright dilapidated conditions. An auction also offers some unique properties which may only appeal to niche buyers. In any case, you get to see a wide variety of home properties. Given below are some ways to buy a house at auction.
Get Information about Auction
Auctions are often announced in property newspapers and magazines. So, keep an eye upon auction related notices and intimations. Besides, you can also inquire at real estate agent’s offices to see if there are any auctions lined up.
The next step is to approach the auctioneer and ask for a catalog. Read it carefully and see if there is anything that fulfills your requirements. Study the property carefully to ensure that it is exactly what you are looking for. Also inquire the market price of a similar property, so that you can set a ballpark figure for yourself, which you should not cross during bidding. Another thing to consider when buying a house in auction is history of the seller.
Visit the Property
If anything catches your eye in a catalog, you should go and visit it in person. Since, property buying is a major decision, you cannot bid before seeing it yourself. If the property seems to be in need of major structural changes, then it is best to take an architect, a general contractor along with you. This should give you an estimate of the overheads that you are likely to incur after buying the property.
Make Provision for Finances
If you win a bid, you will be required to pay 10% of the bid amount on the day of auction, while the rest, within 28 days of the auction. Hence, it is best to keep your finances ready in case you win a bid. If buying a house with cash is not for you, then you will have to look for finance options. A period of 28 days is not enough to meet mortgage lenders, getting approvals and finally making the payment. Instead, talk to mortgage lenders regarding a possible property bid. Also, make provision for the first installment of property.
On the Day of Auction
If you are a novice in this field, then you may get intimidated by the sight of auction. Auctions are usually busy affairs, hence, reach the venue early and find a good seat for yourself. The first and most important thing that you should do after reaching the venue is find an ‘addendum sheet’ and read it thoroughly. Final changes and corrections in the property descriptions are reflected in this sheet. Pay attention to every detail of your prospective home.
Do not get nervous or too excited as the bidding starts. The whole atmosphere is likely to force you to go overboard with bidding. Also the time and efforts invested in research of this property may seem too overwhelming to let go of it. However, if the bidding goes well beyond your ballpark figure, withdraw yourself on time. On the other hand, if you succeed in bidding, read the contract carefully. Once, the property goes under hammer, neither of the parties is allowed to back out. Besides, as soon as the bid is made, the property is transferred to the highest bidder.
Buying at auction is the quickest way of buying a house as the entire procedure, from declaration of auction to actual auction is completed in a month’s time. Hence, you cannot afford to waste time procrastinating about the bid.