Minimising Buyer Risks at Auction in 2023

Going into 2023, buyers may have a more cautious approach when purchasing property. With the recession and cost-of-living crisis, it’s important to understand and minimise risks and navigate the current difficulties as effectively as possible.

While it’s hard to predict what’s exactly to come with the ongoing economic uncertainty, buying at auction provides a number of benefits that can help circumvent challenges currently prevalent.

Uncertainty can even breed opportunity in the property market. So, more buyers may look at auctions in 2023, and more sellers could turn to it as well as it provides an alternative solution for both buying and selling.

Buying any property comes with risks, particularly in certain economic climates. With it being the most expensive purchase many of us ever make, it’s crucial to be aware of how to minimise risks. Here are a few ways to help you do just that when buying at auction.

Do your due diligence

Effectively doing your due diligence is always key when buying any property at auction. If you’re interested in a property, thoroughly check the legal pack, auction terms, and particulars of the property before making any bids.

The legal pack in particular can contain information that could impact your ability to use and sell the property. It’s also important to do your own research and check if the property is subject to any planning constraints or other legal problems.

Consider your finance options

Finance is a key part of buying property at auction. As soon as you’ve placed a winning bid, you’ll need to pay the deposit. And then you’ll typically have between 28 and 56 days to come up with the full purchase amount.

Because of the nature of auctions, mortgage finance can cause issues as there are so many regulatory hurdles and additional checks that take time. If you aren’t able to buy with cash, bridging finance should be considered as it can take only a matter of days to receive the funds.

While this kind of finance comes with higher interest, it provides a way to receive funding quicker than through mainstream mortgages. Most buyers later refinance to a more competitive mortgage rate, typically after a refurbishment is carried out.

Make a plan and stick to it

Some buyers may be worried they’ll get caught up in the heat of the moment during a property auction. It can be exciting, especially if you feel you’ve found the perfect property.

So, be strict with yourself and don’t allow yourself to get carried away. Make a plan and decide on a clear maximum bid ahead of time.

Get professional advice

It’s recommended to instruct a conveyancing solicitor to look over the legal pack if you come across a property that interests you. This can help ensure there are no surprises down the line if you have the winning bid.

Additionally, it can be beneficial to get a professional building survey undertaken. This can help you factor in any remediation costs into what your highest bid should be, particularly as labour and material costs have increased in recent months.

With energy prices still being a top concern, buyers will also be increasingly considering a property’s EPC rating and the costs of energy efficient improvements on any purchase.

If you’re interested in buying a property at auction, it may be valuable to have a team of experts to help you with these key areas and ensure you know as much as possible about the property and its condition.

Summary

It’ll be interesting to see how 2023 pans out for property auctions. While there are considerations to make, buying at auction provides a number of benefits. And it can be a great way to buy property for competitive prices throughout times of economic uncertainty.