Buying property through auction: what you need to know
Posted on: Monday, September 7, 2020
Whether you're a pro or new to buying property, it can be a daunting experience with various obstacles along the way. However, buying at auction offers many benefits to homebuyers that you may not expect, including enhanced security and transparency to keep you in control and informed every step of the way.
These benefits ensure that buying at auction is no longer just for the experienced investor. However, as more and more property sales are completed via auction each year, it's increasingly important that buyers can sort the facts from the fiction and truly understand the auction process.
We reveal three of the most common misconceptions buyers can face when considering an auction property:
MYTH: "Auction properties are always run-down"
FACT: Auction is about the person, not the property!
We often hear this misconception discussed in relation to auction properties but, in fact, all kinds of properties are sold through auction every year. This of course includes homes requiring development work, but also much higher-end properties from all areas of the UK.
It's important to remember that auction is all about the personal circumstance of the seller and not about the property itself. An auction sale is not the solution for everyone, but for sellers who are looking to move quickly and securely, and for buyers who are looking to avoid a fall-through and commit to a fixed timescale, auctions provide the speed and security they need.
MYTH: "The process is ambiguous and stressful"
FACT: Auction provides an easy, transparent and secure process.
The auction process itself gives potential buyers all the information they need upfront in the form of a Buyers Information Pack - a collection of detailed property documents to help you make an informed decision before proceeding. This means that you can make a more informed transactional decision on an auction property, as you get to see all of the property information in advance, before you've even viewed the property.
As with Private Treaty sales, you can view the property before making a commitment, with 68,000 auction properties viewed in 2019 alone (EIG, 2019). Then, from the point at which the auction ends, a set timescale ensures that there is very little risk of a fall-through while the transaction completes. Furthermore, our dedicated Guild Auctions team remains on-hand throughout your transaction to answer any queries you may have, helping to drive our 95% success rate.
MYTH: "It's only for cash buyers"
FACT: The Modern Method of Auction opens up auction to mortgage buyers, too!
The beauty of MMoA is that it gives buyers the extra time they need to arrange their finances - including mortgages. Unlike with Traditional Auctions where buyers need to be cash-ready, this extra time is unique to MMoA.
At the end of the auction, both the seller and buyer enter into a Reservation Agreement which commits them to completing the transaction, greatly reducing the risk to both parties of any fall-through and providing a commitment from the seller whilst the buyer arranges their finances.
Considering an auction purchase
Buying a home is a big decision, so it's important that you're aware of all the options available to you from the start - including auction purchases. With more and more homes in the UK being sold by auction each year, it's important for buyers to be fully informed and understand the process.
