Many people prefer to buy a house on auction here in SA, bank repossessed property often gets auctioned at low prices and those bargains can be picked up.
Purchasing properties in this manner is very different to buying through an estate agent and the purchaser will be required to have usually between five and ten percent of the purchase price available as a deposit. This money gets held in a trust account to ensure legal compliance.
The property catalogue at an auction will usually display an auctioneers commission payable on the sale and will vary between auctions.
The following seven tips to buying a house on auction will help you to purchase the right property quickly, easily and with hassle.
Buying an asset as expensive as a property can be a very stressful and anxiety-causing process, but with the right guidance and advice, you can ensure that you follow the right process and achieve the right results.
Tip #1: Understand the auction process
Going to an auction can be somewhat overwhelming if you have never been to one before and if you do not understand exactly how the process works. You may find yourself stressed out and not knowing how or when to bid or where to register and who to talk to.
It is therefore a great idea to find out all you can about the auction process so that you are sure that you know what you’re doing at an auction.
You can contact a staff member at an auctioneering house and ask for tips and advice and they will guide you as to what you should be doing.
For most auctions, it is essential that you first register with the auctioneering house. They may also want to see some documentation to ensure that you are capable of paying for anything that you may bid on.
Tip #2: Find a reputable auctioneering house
There are a great many auctioneering houses who offer properties on auction. Contact any of the following organisations, companies or individuals to find out about the properties they have for sale:
- Financial service providers like Standard Bank, First National Bank and Nedbank.
- Auctioneering houses like Aucor
- Real estate agents like Pam Golding and Rawson Properties.
It is very important that you find an auctioneer with a good reputation, a good track record and who is known to be honest.
There are a number of auctioneers who have the reputation of being dishonest because they push assets to prices of above what they are worth and because they hide flaws and faults in the assets that they sell.
Tip #3: Stick to your budget
It is incredibly important that you decide what you can afford to bid on a property and then stick to it. Many people are tempted to go over their budgets in the auctioneering process and find themselves tied down to payments that they cannot actually afford.
Make sure that you know what you can afford and that you do not go over it. This can be difficult so it may be a good idea to take someone with you who can help to remind you that you should keep below a certain amount no matter how much you like a property.
Tip #4: Inspect the property thoroughly
Make sure that you thoroughly inspect the property that you are interested in before you buy it. Make a list of all the things you need to check on, like the plumbing, flooring and wiring, and then leave no stone unturned.
Tip #5: Ask for an expert second opinion
It is very unlikely that normal individuals are experts on structure and the basics of what makes a property worthwhile. It is therefore necessary that you take an expert with you to inspect the property.
At the very least, tell them about the property, the area and your budget and ask them whether they think that the property would do for you and your budget.
Tip #6: Review the area that the property is in
The area that a property is in is a very important influencing factor on the worth of the property. It is a good idea to thoroughly research the area, take a drive through it, find out where the shopping centres, gyms, schools and restaurants are and what they are like.
Tip #7: Check your credit record and find some financing options before you go looking for a property
Make sure that your credit record is good so that you will get the lowest possible interest rate on your home loan. Find some financing options and discuss them before you decide to look for a property.
More useful facts
The main difference between buying a house on auction instead of through an agent is that the purchaser is responsible for all costs in the transaction.
Even the commission has to be paid by the buyer instead of a seller who would normally pay the estate agents fees. Many auction houses can offer facilities to arrange a bond or finance for a potential buyer through their affiliated bond originators.
It is wise to decide on an amount of money you feel you can afford to pay for a property before even attending an event. Decide exactly what amount you are comfortable with and the auctioneer should be able to give you an idea as to the estimated value of any property up for sale.
You will get a more realistic idea of the value of any given home by researching the prices of other houses for sale in the same area beforehand if possible. There are a surprising amount of repossessed properties available these days so check your local newspapers and be on the lookout if you are in the market to buy a house on auction in South Africa.