If you’re eyeing the property market for a bargain, considering a fixer-upper at auction could be a savvy choice. Steven, the Director at Mortgages RM, offers his expert insights on securing such properties at a fraction of the cost.
Advice on Finding Bargain Properties
Steven emphasises the benefits of auction properties, noting, “Houses sold at auction often start at much lower prices compared to those listed on the regular market.” He cautions, however, that “while the starting prices are lower, the final selling price can climb due to competitive bidding.”
According to Steven, preparation is key when considering an auction purchase. “Prospective buyers should be well-prepared, understanding both the auction process and the potential for substantial renovations needed on the property,” he advises. This includes arranging financing ahead of time, especially if the property is not immediately habitable.
Navigating Financing for Fixer-Uppers
Steven discusses financing options for properties that require significant renovations. “For properties that aren’t liveable, bridging finance is often necessary to cover purchase and initial repair costs before transitioning to a standard mortgage,” he explains. He highlights the importance of being aware of the higher costs associated with bridging loans, including higher interest rates and fees.
The Potential Pitfalls of Auction Buying
He also points out the risks involved in buying at auction. “It’s crucial to be prepared for the possibility of hidden issues with the property, which could make it unmortgageable and more difficult to sell in the future,” Steven notes. This underscores the importance of thorough due diligence and possibly consulting with legal and structural experts before bidding.
Professional Assessments and Surveys
“To minimise risks, ensure the property is habitable and suitable for a mortgage by having it assessed by a qualified surveyor before you bid,” Steven suggests. Properties need to meet basic standards for utilities and structural integrity to be financed through traditional mortgages.
Closing the Auction Deal
The process of closing on an auction property can be swift and requires readiness to act quickly. “If you win a bid, you’ll be expected to exchange contracts and pay a deposit on the spot,” he explains. The typical completion timeframe at auction is much shorter than that of traditional property sales, demanding prompt financial readiness.
Steven advises buyers to be thoroughly familiar with the auction house’s terms and conditions to avoid surprises. “Knowing the full scope of what you’re committing to will help you budget for not only the purchase price but also any additional fees like buyer’s premiums,” he says.
Concluding his advice, Steven emphasises the importance of preparation and informed decision-making. “Auctions can be a great way to secure a property at a good price, but they require careful planning, financial foresight, and sometimes, a bit of courage,” he states.
By sharing his professional expertise, Steven provides potential buyers with the knowledge needed to navigate the complexities of buying fixer-uppers at auction, ensuring they are well-prepared for the challenges and opportunities such transactions present.
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