Buying a Property at Auction

If you have ever watched the TV show, “Homes Under the Hammer”, then you have a pretty good idea of how properties are sold at an auction.

You also are probably aware of the bargains to be had, and also some of the pitfalls that you need to be aware of.

Buying anything at an auction, be it a property, furniture, antiques, a collectable item, anything, can either be a bargain to be had, or you wind up bidding too high, or the item has issues, such as in need of repairs.

There are bargains to be had at auctions, but the first thing you need to know and do is your homework, research.

You need to research what it is you are looking to by, in this instance a property.

Before the Auction Research

Many auction houses release packets and details of the properties they are planning to auction off. These details outline the property, location, if there is a reserve (an amount the seller must receive), and other details about the auction itself.

Buying a property is for the majority of us, the single largest purchase we will make, and there are a few things to be aware of and look out for when buying a property. And as we will see, buying a property at auction in itself adds a few additional things to look out for.

If possible, it is always best to try and physically go see the property or properties you are interested in bidding on.

There is no way a photo and packet of information can convey what you can see and feel by actually going to see the property in question.

Things like what is the neighbourhood like, is the property really as close or as far away from pubic transport as stated. You may find the property sits just next to a busy rail line and trains go noisily by at all hours.

Auction Financing

When buying something at an auction, the bidding usually starts either with the seller’s reserve, or the auctioneer will start at a price near the reserve.

As people bid, including yourself, it is easy to et caught up in the heat of the moment, and possibly overbid; paying more than you had anticipated to pay.

One way to not have this happen, and with auction purchases you need to have this in place prior to bidding, is to have your financing in place already, and knowing exactly how much you have to spend.

When you buy a property at an auction, if you are the successful bidder, you will be expected to pay 10% of the sale price on the day of the auction, and then the remaining balance within 28 days.

Now 28 days may seem like enough time to secure a mortgage, but not all mortgages get approved in that time frame, and in addition, a valuation will need to be done on the property.

Mortgages are granted based on affordability, a deposit (in most instances), and a valuation of the property.

You need to have financing in place prior to bidding, or at best a loan in principle, pending a valuation.

Why Buy a Property at Auction?

The obvious reason to buy a property at an auction is to bag a bargain!

Another reason to buy property at auctions is that you know when the gavel goes down and the auctioneer says sold to you, you bought it. You cannot be gazumped and loose out.

Auctions can be good for property investors, who like to buy a property, and then fix it up and quickly sell it on.

So a couple of points to remember if buying a property at an auction:

* Do your research on the property prior to the auction

* Know your budget

* Get your financing in advance of the auction

* Remember there can be some additional expenses with buying a property at auction, repairs, etc

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<strong>What is Our Criteria For Applying?</strong> 
Every lender on our website has their own specific criteria by the basics are mentioned below and you must have a guarantor to be eligible. Simply select the lender of your choice and you will be taken directly to their website where you can apply. You will be required to submit your details including:<li style=”text-align: center;” data-mce-style=”text-align: center;”>Name (must be over 18 as the borrow, 21 or 25 as the guarantor)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Residence (your chances will improve if your guarantor is a homeowner)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Employment status (must be employed or on a pension)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Income (earning at least £600 per month and able to make repayments)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Monthly expenses (not have too many loans open or in major debt)</li>
You will then be asked to include the details of your guarantor and as mentioned above, this is usually someone who you know and trust and wants to help you with your personal finances. Ideally, a guarantor with good credit will maximise your chances of being approved based on the idea of ‘if someone with good credit trusts you, well we can too.'<strong>How Much Can I Borrow From Guarantor Loans?</strong>Guarantor Loans gives applicants the chance to borrow £500 to £15,000 depending on the lender. Some lenders we feature like Buddy Loans only have a maximum loan value of £7,500 and TFS Loans is the only lender that stretches up to £15,000.Factors that can influence the amount you can borrow revolve around having a good guarantor. One that is a homeowner, with solid employment, income and good credit rating will maximise your chances of borrowing the largest drawdown possible.The lenders featured on Guarantor Loans see a homeowner as someone who has already gone through the rigorous process of credit checking and affordability and if they can afford a house, they should be able to act as a guarantor for you.By comparison, having a guarantor that is not a homeowner offers slightly less security and means that amount you can borrow is slightly less too.Higher amounts may be available to those who already have a better than average credit rating, are homeowners themselves and a repeat customer with the lender who has already paid their loan on time. To apply directly with your lender of choice see <a href=”” data-mce-href=””>direct lenders</a>.<strong>What Does The Guarantor Have To Do?</strong>Upon completing an application, the lender will typically send you a <a href=”” data-mce-href=””>pre-contract loan agreement</a> and SECCI (Standard European Consumer Credit Information form) which will highlight the terms of your loan. You and your guarantor will be required to review the terms of the loan, including the loan drawdown, fees, repayment dates and responsibilities – and this can be signed via an online verification process using your email and mobile phone.The lender will usually carry out an individual phone call with you and your guarantor to ensure that you both understand the responsibilities and what is required of you – notably that if you cannot make repayment, your guarantor will be required to pay on your behalf. Further to some additional credit and affordability checks, funds can typically be transferred within 24 to 48 hours (or sometimes on the same day).<strong>Are Guarantor Loans Available For Bad Credit Customers?</strong>Yes, even if you have a history of adverse credit, <a href=”” data-mce-href=””>CCJs</a>, bankruptcy or IVAs several years ago, you can still be eligible. The idea is that you are using your guarantor and their financial history to ‘back you up’ and give your loan extra security. However, it is noted that your guarantor should have a good credit score and consent to co-signing your loan agreement.<strong>How Soon Can I Receive Funds?</strong>Guarantor Loans works with lenders that can facilitate funds within 24 to 48 hours of approval, or sometimes on the same day.When your funds are successfully transferred, most lenders working with Guarantor Loans will send the full amount to the guarantor’s debit account first. This is a standard security measure carried out by lenders to ensure that the funds are going to the right person and confirms the involvement of the guarantor. The guarantor usually has a ‘two week cooling off period’ where they can decide to pass on the money to the main borrower or they can change their mind and return the funds with no extra charges.