Buying a property at an auction, or even selling your property at an auction, is very different to using traditional estate agents. Back in the day, property auctions were only for cash-rich property investors, but now thanks to multiple financing options and mortgages, property auctions are for everyone. And, with auction properties being listed on popular real estate portals such as Rightmove and Zoopla, it has become easier than ever to buy or sell a property at an auction. If you are thinking of buying property at an auction, here are the pros, the cons and some much-needed insider tips for buyers.
At the end of the day, the highest bidder will win the auction. But, there are tips and tricks that estate agents in Reigate have shared to bid smartly, strategically and successfully. Tip number one, you need to have your poker face on at all times. Whether you win or you lose, whether you bid high or you bid low, your poker face needs to be on. Your face should not show what is on your time. Number two, and most importantly, keep calm while bidding. Never bid on an impulse; do not get competitive, do not get carried away, do not make emotional bids and do not make it personal. Always stay calm and remember your budget! Essentially, the smart thing to do at an auction is to figure out your maximum bidding price and do not exceed it, no matter what.
Tip number three, always bid consistently and steadily. Some buyers prefer to start the bidding while some prefer to join in at the end. How you bid is up to you, but you need to consciously remember to bid steadily; this prevents the price from jumping too high too quickly. While there is no one correct approach to bidding, you need to be able to read the room and choose the right approach for yourself at that moment. Now that you know the insider tips and tricks to bid successfully at an auction, here are the pros and cons of buying at an auction.
Pros of buying at an auction
You can get a good deal
Usually, sellers will set their reserve price around 10 to 20 per cent lower than the price they would set with an estate agent. That is why you will always end up getting a good deal at an auction.
The process is quick
When you buy at an auction, the entire process will be over within minutes. And, you will have the keys within 4 weeks of the auction. As for sellers, they will get a 10 per cent deposit on the day of the auction and the deal will close within a month. So, the overall process is quick and efficient.
Always a certainty of sale
This is the most important aspect for buyers and sellers. As soon as the winning bid is declared, the buyer and seller will sign the contracts. This means no party can pull out at the last minute, hence giving both buyers and sellers the certainty of a sale.
The process is transparent
You can see and hear the other bids for yourself, so the process is very transparent. An auction process is also very fair, efficient and seamless, which is good for buyers and sellers alike.
Cons of buying at an auction
You could cross your budget
In the heat of the moment, a buyer could attempt to outbid another bidder to win their dream house. Going over your set budget could be disastrous in the long run.
You cannot change your mind
Once you have signed the contract after winning the auction bid, you cannot change your mind. If you really cannot go through with the sale, then you will end up losing money. This is different to buying with an estate agent where you could drop out of the sale at the last minute.
Higher buyer’s fee
With an estate agent, buyers will have to pay 1 per cent or 1.5 per cent of the total sale value, plus VAT. When it comes to auctions, buyers can pay anywhere between £500 to £5000, plus VAT, depending on the auction house.
Fewer options
The options at an auction are much fewer than the options available in the open market. A traditional estate agent will have more options to choose from.