1. Check the legal pack
If you're a seasoned investor, you may have seen legal packs hundreds of times, but each one will have differences relating to the particular property. Make sure you’ve read the small print, as it’s often in these sections where surprises such as covenants, restrictions and rights of access are noted.
2. Don’t get caught out by the six month rule
If you’re buying the property as an investment or to let, banks generally won’t lend on it until it has been owned for six months. However, what is not as commonly known is that the vendor should also have owned it for at least six months. When buying at auction even seasoned professionals can be caught out by this, so it’s important to find out how long the vendor has had the property, otherwise it could be an issue with a high street lender.
3. Investigate any tenancies
Is the property you are planning to purchase tenanted? Take the time to find out some background information about both the tenant and the tenancy agreement. Assured shorthold tenancies can cause issues for finance, whilst if you buy a property with a regulated tenant, you may find you’re going to be waiting a long time for that property to be vacated, as they will have the right to remain, and usually at rents well below the market rate.
4. Keep calm
The auction house can be an exciting place, but don’t get carried away. If a particular property attracts a lot of interest, it’s all too easy to keep bidding but remember, once the hammer goes down you are legally committed to the property. Stick to your figures and know your bid limit. Remember the guide price is just that, a rough a guide; the property could go for under or over that price, so it’s important to ensure you don’t stretch yourself.
5. What to do when the lot isn’t sold
If a reserve price is not met, the auctioneer will withdraw the lot from the auction. However, at the end of the auction the vendor may agree to sell the property at a lower price. Ask the auctioneer if you can register your interest for such properties and you may find yourself with a last minute win.
6. Contact us
Here at Together we've a team of auction experts ready to help you fund your purchase, get in touch today.