What You Should Do If You Plan to Buy at Auction in 2023

Are you interested in buying property at auction this year? Here’s some advice to help you plan for the purchase and be prepared for when the right property comes along.

Planning your finance and dealing with rising interest rates

Securing finance is a key part of buying at auction. Many buyers use a short-term loan, such as bridging finance, to secure the funds needed quickly in order to meet the timelines required for this type of property purchase.

This kind of finance usually comes with higher interest rates. So, you need to be confident with the amount of funding you can and need to secure. Make sure you also consider the mortgage deal you could secure when you refinance. But you need to ensure the property isn’t unmortgageable.

Additionally, as interest rates have been on the rise and as many are forecasting further increases, factor appropriate rates into what you’ll need to borrow for the short and long-term finance.

Researching your property auction options

Auction houses often cover wide areas. And many advertise properties and land on their own websites and the mainstream property portals like Zoopla and Rightmove. So, spend some time researching what’s out there.

There are traditional in-person auctions where buyers bid for properties in real-time, either in an auction room or remotely. In recent years, there has also been a rise in online auctions, the modern method of auction, where bidding all happens online.  This has led to a wide pool of auction sellers.

Learning how to value properties

When you find a property you’re interested in, you need to effectively evaluate and research the property and also consider prices in the local area. This will help determine its proper market value.

It may be helpful to create a checklist for when you’re viewing properties. And you may want to arrange for a survey to be undertaken to learn more about the property’s condition. A qualified surveyor can also offer an independent valuation.

Understanding the legal pack

The auction legal pack is such an important part of buying property at auction. It allows you to better understand the property and what could impact your ability to use and sell it.

Usually, the legal pack includes the title plan and register, local authority searches, water and drainage search, a fixtures and fittings list and property information questionnaire. Thoroughly assess these documents and check for any special conditions of sales, leasehold or occupancy restrictions, planning constraints or other legal problems.

Finding a solicitor

Before making a bid on a property, it’s recommended to hire a solicitor to look over the legal pack. This helps avoid any surprises later down the line. Because of this, it may be helpful to look for a solicitor before finding a property you’re interested in.

Setting a budget and sticking to it

Prior to an auction or putting a bid in, set a clear budget and stick to it. Factor in all of the relevant costs and use what you’ve learned from viewing the property, looking at the legal pack and any professional insights from surveyors, solicitors and tradespeople to make an appropriate bid.

If you’re looking to buy at auction this year, be prepared for this type of purchase so you can make the most informed decisions when a property you’re interested in comes under the hammer!