Auction is a big step for any new investor looking to invest in real estate. We would recommend that any investor looking to purchase using this method should find themselves a property consultancy firm they can work closely with. This is where we can add further value on such investments and provide a wealth of experience to ensure this method works and is effective to maximise ROI.
Here is our insight to Auction purchasing of property:
1. Have a plan for the full balance to be paid and don't rely on a bank/lender to meet your 28 day deadline. This comes from experience of seeing many people stuck when a lender refuses to lend on the property they have just obtained and in a position where the deposit they paid maybe lost.
2. Ensure the initial 10% deposit once the hammer falls is available to be paid by debit card immediately or cleared by cheque
3. Read the legal packs. We have seen many vendors insert clauses such as the buyer should pay for a council bill I was served and in some cases these bills have been up to £7,000. Often in small print in the special conditions but you should pay close attention to this as it cab affect the ROI if you paid more for the property as you didn't know about this.
4. Do your due diligence, if your just starting out then working with someone with far greater expertise that can help to spot any issues on an initial inspection of the property.
5. Auctions properties tend to be sold as seen and once the hammer falls contracts are exchanged and if you don't complete the seller could pursue for further damages due to delays and their loss of income.
With auction purchases we now only recommend this strategy for those who have the ability to purchase cash. As this ensures the total balance can be settled by the purchaser should a lender withdraw from paying out on any particular property due to any reason, or if the legal team are unable to meet the required deadlines.
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