The pitfalls of buying property at auction
You may have seen the countless property shows on daytime TV where people buy outrageously cheap houses at auction, do them up quickly and then sell them on for a profit. But the reality is that buying at auction is fraught with difficulties and potential pitfalls. Buying cheap at auction can work, of course, but there is a very good reason that not everyone is doing it. That’s largely because when things go wrong, they go wrong quickly and seriously, leaving you in a bit of trouble. Here are some of the reasons why:
Less time for surveys
The speed of purchase at auctions is often one of the advantages as you can move quickly. However, with a short window to arrange a survey and get a solicitor to go through the details, there is a risk that things can be missed. With only three weeks between placing the listing and auction, the due diligence period is greatly reduced.
You’ll also have to make sure that you have all your finances in place before the auction. You will have to pay 10% up front and then have 28 days to pay the balance. This can be done but it can cause problems for some people.
Going over budget
In the excitement of the auction room, it can be easy to get carried away and bid more than you can afford. Without time for sober reflection and discussion, what you thought was a bargain can quickly end up costing more than you thought. When it comes to property, acting on impulse is never a good idea. But when the bidding gets underway, the best-laid plans can go out the window.
Lack of research
With little or no time to do research, you might end up buying a property that is not suitable for your purpose. There may be rental restrictions or reasons that will put off renters, but without the required time to do your homework, this can get overlooked, leading to big problems.
The bottom line when it comes to investment is to take your time and do your homework. You should only put money down when you are sure that it’s going to be a solid investment. To do that in the most secure way, you need an in-depth knowledge of the local property market. If you don’t have the time or ability to do this, then you can always enlist the help of the property experts at Agile. We’re more than happy to have a chat about what you’re expecting from an investment and can help guide you towards making the right choice.
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