Whether you’re looking for your forever home in St Helens, are on the lookout for your next development property or want to add to your Buy to Let portfolio, buying a property at auction can be a great decision.
Buying a St Helens property at auction has several benefits compared to the more conventional buying method.
It can help you avoid getting caught in a chain; you can get access to more unusual properties that you might not find on the regular market, and if you do your research, you could end up with a real bargain.
But there are risks involved with buying a property at auction too, and there are some fundamental rules to consider before stepping through the auction house door to ensure you don’t get more than you bargained for.
Here are our top rules to consider before buying a St Helens property at auction:
1 – Do your research
Auction catalogues are full of properties that look like they could be a bargain, but you need to do more research when buying at auction than you probably would when buying normally.
There are lots of reasons properties go up at auction.
The buyer could be looking for a quick sale, but often auction properties require more work (whether decorative or structural) than other properties.
If you’re planning to buy at auction, you need to start your research way in advance of the auction date. We always recommend studying auction catalogues and picking a couple of properties that fit what you’re looking for and then focus on these.
2 – Check the legal pack
A property’s legal pack is your Bible regarding everything you need to know about the property you’re looking at. We’d always recommend that you never consider buying a St Helens property at auction without studying the legal pack.
Your legal pack will include important information relating to the property, including any special conditions of sale, covenants that cover what you can and can’t do with the property, lease details if you’re buying a leasehold, or what the mortgage implications are.
It could be worth getting a solicitor to look over the legal pack for you to ensure you fully understand the conditions under which you’re buying a property.
3 – Get your own survey
As we’ve mentioned, some properties will go to auction because the owner has struggled to sell the property on the open market, or it could be that the property is in a state that makes it unmortgageable without structural work.
On the face of it, your auction property in St Helens may look fine, but you should get a survey to take a deeper look at the structural integrity and ensure you don’t end up taking on more than you bargained for.
4 – Use the guide price as a guide only
You might be looking at a property with a guide price of £30,000 and think you’ve found the bargain of your life, but properties rarely sell for the guide price.
The final selling price could be anything between 10% and 20% higher than the guide price in our experience – sometimes even higher if you have multiple parties interested.
There may also be a minimum price attached to the property.
So, when budgeting for your property, remember that the guide price is just that – a guide.
5 – Be sure of your finances
Although buying a property at auction can net you a bargain, you’ll need to consider the costs of any repair or decoration work you’ll need to carry out.
Depending on the state of the property, these costs could be high.
This is why it’s essential to have a full grasp of your finances before you start to bid.
If you’ve done your research before this point, you’ll already have a good idea of the value of the property and the type of work you’ll need to do to bring it up to a good (or liveable) standard.
If you’re buying a home to live in yourself, you might be willing to pay a bit more initially as you’ll have more time to make improvements. If you’re buying a property at auction as an investment, remember that the more you spend, the less profit you could make.
6 – Remember that things move quickly with auction sales
One thing some buyers don’t consider (especially when they’re new to an auction) is that once the hammer falls on the property, you’re committed to buying the property in full.
And payment could be due as quickly as 10 days after the sale date.
So, if you’re planning to buy the property with a mortgage, you’ll need to have this in place before you go to the auction.
Remember, mortgages can take a long time to be approved, and if you can’t pay the full amount within the designated time, you could still be liable for payment or at least face a significant fee.
If you’re struggling to get a mortgage in the required time, you could consider bridging finance, which gives you short-term finance while you wait for your mortgage decision.
Bridging finance can be more expensive, so you should talk to a mortgage expert to ensure it’s a viable option.
7 – Don’t get carried away with auction fever
We can’t stress this enough.
It’s very easy to get caught up in the excitement of a property auction, and you can easily find yourself bidding higher and higher above what you’ve budgeted for.
If you’re going to buy a property at auction, it’s essential you know what your limit is and what you can afford and then stick with it.
Yes, it’ll be disappointing if you lose out on the property you were looking at (this is why we recommend looking at a few options), but it would be much worse to overbid on a property you can’t afford.
It could be worth attending a few auctions beforehand to get a feel for what it’ll be like on the day.
Buy your ideal property in St Helens
Whether you’re looking to buy a property in St Helens at auction or you want to go down the usual route, we’re here to help at Stapleton Derby.
We have a wide selection of properties for sale or lease throughout St Helens, and this list grows daily.
Our leading team of estate agents have extensive knowledge of the St Helens property market and further afield in Merseyside, so you can ask us any questions about your property search. Give us a call on 01744 883322 or send us a message using our online contact form and we’ll get back to you as soon as possible.
