Tips on Buying Repossessed Property on Auction

Repossessed property is making up around 20% of all properties for sale in the UK and things are not much different in South Africa. Banks and lenders are often more interested selling than getting a good price for the property, which means you can walk away with a huge bargain.

If you are planning on buying a property at auction be well prepared and make sure you know exactly what is involved. Here are a few tips on buying property at auctions:

Do Proper Research
Make sure to be clear on why you are buying the property. If you are buying to rent, you have to research the rental market in the area. Don’t be tempted to buy in an area you don’t know, or do thorough research if you don’t know the area well.

Do a Test Run
Attend a couple of auctions and familiarize yourself with the process. Get some catalogues to see how different bidders go about bidding. This will give you some confidence when you bid on your first auction.

View the Property
Checking out the brochure/catalogue is not enough; visit the property and make sure to take a builder or someone with knowledge with you. Also make sure you know exactly how much the property is worth.

Sort Out a Survey
Even though you will lose you survey fees if your bid is not successful, it is still important to make sure you know exactly what you are buying into. Don’t cut corners here; it might be a costly mistake!

Decide on a Maximum Bid and Stick to It
Know your budget and make sure that you don’t get influence by bidders pushing the price higher – this might leave you financially overstretched.

Arrange Your Finances Before the Auction
If your bid is successful, you are legally bound to purchase the property. Therefore you have to make sure that you will have you finances ready within 20 days after the auction.

Have Your Deposit Ready
You will need to put down a deposit for 10% of the property’s price, should your bid be successful. Remember to take you check book and at least two forms of identification with your to the auction.

Be Prepared for Other Costs
Remember that you will need to pay legal – , renovation -, running - and insurance costs. There may also be a buyer’s fee to pay at the auction house. You can check this on the day at the auction.

Find Out About Tax
Remember to factor in tax on your rental income if you are buying to let. There might also be other taxes involved so make sure to check it out before you bid on the property.

Make Sure the Auction is On
One the morning of the auction, phone to make sure that the property you are interested in are still up for auction and has not been sold privately. Also read the terms and conditions that are handed out at the auction.