Q: We are considering buying an investment property and have been looking at repossessions being sold at auction as the guide prices appear to be cheaper than those in estate agents' windows. What steps would we need to take to secure a property at auction?
A: Firstly you must decide whether you can afford to purchase a particular property and whether you would be paying with cash or a mortgage. If you need a mortgage you will need to have secured it before the auction takes place. Visiting an auction house beforehand will show you how the process works and give you an idea of how reserve prices compare to actual selling prices on the day.
When you see a property you want to bid on, try and visit it before the sale and carry out a survey to uncover any potential problems that may not be obvious from external viewing or through the auction pack available from the agents. This will help to identify the cost of any required remedial works. It is also worth instructing a solicitor at this stage, to look through the sale pack and advise on any potential title problems or clauses that could affect your intended future use of the property. The solicitor can also provide you with a full report to help you decide on your bidding.
On the auction day, stick to your budget and try not to get carried away. Make sure you include any renovation works, legal fees and stamp duty land tax in your target price.
If your bid is successful you will be required to sign a contract and pay a 10% non refundable deposit. At this stage everything will be legally binding and you will need to instruct a solicitor and inform your mortgage lender immediately as completion is required to take place within 28 days from the auction date..