May 12, 2020
Buying a house is always an expensive prospect, so any way we can make a bit of a saving will always be welcome. Buying at a property auction is one of the few ways that we may be able to get a discount. But is it as simple as that? What are the pros and cons to be aware of? This guide to buying a house at a property auction will go into the main things to be mindful of when doing this.
Avoid Getting into a Bidding War
Firstly, a property auction is like any other, and there will be a mix of buyers present ranging from those looking to buy for themselves to commercial developers looking to renovate and sell on or buying to lease the place out. Sometimes personal bidders can let their emotions get the better of them and get caught up in a bidding war, paying much more than the property is worth. Don’t let this be you.
Check for Debt Attached to Property
Often a property is auctioned due to repossession by the bank when an occupant has defaulted on their mortgage. Now once you buy it from the bank, then it's not the case that any mortgage debt would be due by you as the new owner. However, what you may find is that the previous owner has amounted a series of debts that will still be due. Now, that is not to say that you are going to be liable for the repayment of these debts, but you may still find that debt collectors will call looking for these monies. You may also find that you must convince electricity and gas suppliers that you are separate from the old owners before you can get an account and have the power reconnected.
There are often issues when buying a house with the structure of the building, and when making an auction purchase, sometimes it is easy to rush into things and neglect good practice. You should always look to get a competent property survey completed, or at least read the one provided. It’s not to say that issues such as foundation cracks, damp in the timber, or pest infestations cannot be rectified, but you should keep in mind these costs when setting your maximum bidding price. If necessary, get a quote on the value of works needed from experts such as The Concrete Team.
Are There Tenants in Property
It’s easy to assume that the people who defaulted on the mortgage were the same people who were living in the property at the time. Often the property has been rented out, and you have the issue of the sitting tenants. It's essential to know the situation thoroughly and check out what the contractual position is with the current tenants, and what their rights are? You may be interested in keeping the tenants on if it is a commercial purchase, and in that case, you should talk to them and have the lease transferred to an agreement between you and them. They may even be glad to be rid of a landlord who has money problems and look forward to a good relationship with a new landlord.