21 Nov 2017
Posted in: First Time Buyer
Ever thought about buying a house on your mobile phone? Well, at a property auction in September 2016, that’s precisely what 1,000-plus people attempted to do. The auction, carried out by Allsop, had a total of 3,898 bids on 140 properties. And almost a third of bids came from people on their mobiles.
With the demand for property in Ireland’s cities being particularly strained, buyers are turning to alternative methods to find their dream home. That’s one of the reasons property auctions are growing in popularity. Plus, buying at auction is more efficient and you might pick up a bargain. If you have the finances ready, you could get the keys for your new house in a manner of months.
On the Irish landscape, two companies dominate property auctions: Allsop and Connacht Property Auctions. Allsop holds four auctions a year in Dublin (with online bidding) and Connacht Property Auctions is aiming for five in 2017. However, some estate agents also hold auctions on an ad-hoc basis so it’s worth checking their websites too.
Prices can vary significantly. In an auction in July 2017, a three-bedroom house in Clondalkin held a guide price of €65,000-€75,000 but sold for €153,000. There are bargains out there though: a property just outside Westport in Co Mayo recently sold for €20,000.
Expect bidding to be hectic. In an auction in September 2016, 30 bids were logged across 20 properties in the first 30 seconds of bidding being opened, so it’s not for the faint-hearted. You can’t just show up either: to bid with one particular auction company, buyers must register with a credit card. With Allsop, for example, a registration fee of €61.50 applies, but crucially, all buyers must have the deposit ready to pay on the day too.
The deposit varies relative to the cost of the house, ranging from €4,500 for properties that cost less than €300,000 up to €20,000 for properties valued at over €1 million. Connacht Property Auctions requires a 10 percent deposit on the day of the auction to secure the property.
As great as it would be, you can’t just walk into an auction and buy a house or apartment with a tiny bid. Although properties are advertised with a price range, they always have a minimum reserve. If the minimum reserve isn’t met, the sale won’t go through. So, going in with a cheeky bid way under the advertised price might seem like you’re getting a bargain but you are unlikely to get away with it.
According to the Irish Times, buyers should go into an auction with, “a maximum price and ensure you don’t bid over that number.” The paper adds, “unfortunately, many people get carried away and over-bid with financially negative outcomes.”
It’s also worth scoping the property out. Many people make the mistake of thinking they can’t arrange a viewing of a property that’s on sale by auction, but that’s not the case. The details of the properties on sale are available weeks in advance of most auctions, so viewings can be arranged.
Most mortgage lenders will insist on a surveyor’s report of the property which can be sorted by contacting the auction company who will arrange to let the surveyor have access to the property to make the necessary checks.
It’s also worth making sure that your solicitor gets the legal pack, which contains the contract and other documents such as title information, maps and other particulars as soon as possible prior to the auction.
This might sound like something you could skip, but as soon as the hammer goes down on the auction and you’ve paid the deposit, the property is yours and so are any problems it comes with – so make sure you’ve got your documents in order!
You can use our mortgage calculator to find out how much you may be able to borrow. And if you’d like to talk through your mortgage options book a 30 Minute Mortgage Meeting with a Mortgae Master today!
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