Copyright (c) 2008 Parmdeep Vadesha
Auctions are no longer reserved for investors out to purchase property
for the purpose of reselling it for a profit. In recent years, more and
more people are using property auctions as a method of finding homes to
buy and live in.
The main lure of property auctions is the price. Auction property is
generally a bargain compared to those purchased through a selling
agent. The bidding system is transparent, as you'll know for sure the
amount that other bidders are offering. Furthermore, the auctioned
property can be yours immediately - usually about 28 days after the
sale.
To locate properties up for auction, locate the auctioneers in your
area and sign up to be on their mailing list. Auctioneers usually send
catalogues or online information regarding the properties for sale in
your area. A good catalogue contains the basic information such as the
floor plan, the guide price and a photo of the property.
Since the prices of auction properties are often well below market
value, it is easy to get all excited and want to buy it right away.
However, hold your horses and first get a survey conducted. A surveyor
will conduct a home buyer's report which will assess and point out
potential problems you may have on the property. If the property seems
like it needs some major work done, then get an estimate from your
local builder, electrician or plumber. Dirt cheap properties often have
the caveat of entailing expensive repairs. Factor in the cost of
renovation to the price you are willing to bid. Though most auctioneers
will provide a seller's pack which contains a survey, valuation and
other information on the property, you might still want to get your own
surveyor - just to be on the safe side.
Before going to an auction, make sure you have enough cash for the
property's requirements. This is important because a sale becomes
legally binding immediately. Once a bid is won, the buyer will usually
need to make a 10% deposit immediately and pay the remaining balance 28
days after the day of the sale. Therefore, do not go to an auction to
bid if you do not have cash ready or if you do not have a firm mortgage
arrangement. For this reason, first-time home buyers should think twice
about purchasing at an auction considering that most of these
properties will require extensive renovation work and a large upfront
cash investment.
As they always say in property investment, fall in love with the deal
and not with the property. Take account of all costs and expenses
involved in deciding on your maximum bid such as solicitor's fees,
arrangement fees to the mortgage broker, valuation and survey fees,
building insurance, moving costs and the expenses incurred in selling
your previous home or property. Remember that the reason for purchasing
a property at an auction is to get a bargain, and not to spend more
than necessary. Thus, factor in the other considerations such as the
amount of deposit you can afford, the true market value of the property
and the cost of repairs and improvements.
With these tips in mind, you are all set to embark on your first
auction and come out of it with a bargain.
Article Source:
http://www.articlesbase.com/finance-articles/
what-you-need-to-know-before-going-to-a-property-auction-469717.html About the Author
Parmdeep Vadesha is a property investment expert
and founder of the largest community of property entrepreneurs on the
web who buy below market value properties from distressed homeowners
facing repossession, divorce and bankruptcy. He writes a monthly
newsletter for over 70,000 property investors worldwide - http://www.Property-System.com |
