Buying property at auction can seem an exciting prospect – bidding against competition to secure your dream home at an amazingly low price is the dream of any homebuyer, experienced or new to the market. Unfortunately, it’s often not as simple as that. Although the actual process of bidding on your prospective dream home is simple, the implications are great and the stakes high if things should go wrong. Here are some of the major pros and cons of buying a house at auction.
The pros
You might find a bargain
If you’re an experienced property buyer with flexible specifications for your desired purchase, you may find yourself walking away from an auction with a saving of several thousand pounds. Be aware, though, that if a property is priced low and doesn’t have much competition for the sale, there’s usually a good reason. Buying property at auction isn’t for the faint of heart and can easily lead to costly mistakes in the long term. Which leads us to…
The cons
Mortgaging
You’ll typically have 28 days after the end of the auction to settle the remainder of the price of the property. Most mortgage lenders require significantly longer than this to approve a mortgage, so you’ll need to organise the finances before you know that you’ve secured the property – not always an easy task.
Unexpected surprises
If you’re looking to buy at auction, chances are that you’re doing so to save money on your purchase. This can often go hand in hand with taking shortcuts on expenditures like a structural survey or proper guidance and research on the property and surrounding area. Unfortunately, these can often lead to costly mistakes in the long run: think significant defects going unnoticed that cost thousands to put right; planned developments in your new neighbourhood that could negatively affect the price of your property or the quality of the living experience; or buying in an area that yields a poor return on your investment leading to a loss when you resell in a few years’ time.
Lack of guidance
One of the major benefits of buying through an established estate agent with a proven track record of reliability and excellence is the ability to trust their judgement, and seek guidance from them whenever you need it. Buying a house can be a complex process with high stakes, and unless you’ve done it numerous times and are very familiar with the sector of the market you’re purchasing in, as well as the geographical locality, there are numerous pitfalls.
