What are the pitfalls and downfalls to buying property at auction?

• Posted by Ben James
• Date 5th October 2015
• Leave a comment

Buying at auction carries the same legal implications as a signed contract and that contract binding as soon as the hammer falls, unlike a normal purchase where the buyer and seller are not committed to the sale until all the written contracts are concluded.

Auctions can be a great way to pick up a bargain but properties sold at auction are often in poor condition or have problematic legal titles so it is best to get a pre-auction title report and a building survey beforehand. If not, you may be subject to conditions of sale whether you like it or not.

If you are successful at auction you have to pay a deposit of 10% of the purchase price immediately. You then have 28 days to pay the full amount, so you need to have finance in place. If you cannot complete the sale within that time, you will lose your deposit.

It can be difficult to do all the necessary searches on an auction property, especially if it is a deceased estate and if you buy at auction and then find something wrong with the property, you might not have any recourse to the seller or the auctioneer.

We regularly buy properties with joint venture partners from Auctions using three different strategies focusing on never investing more than than seventy five on the pound for each property. If you're thinking of getting into property investing and you'd like to use our knowledge and experience in achieving a profitable exit within the quickest turnaround time, then we'd love to hear from you. 

Thanks for reading,

The Estateducation Team.