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Bidding for a Mortgage

By: Emma Eilbeck BA (hons) - Updated: 29 Oct 2010 | comments*Discuss
 
Auction Bidding Repossession Deposit

You may not think it, but auctions really are for everyone, and a great way to pick up a bargain.Many people think that to buy property at an auction you have to be very wealthy or be willing to spend over your budget, which is not the case.Auctions are open to everybody and many people at your average auction will be first-time buyers dressed in their jeans.Auctions are becoming increasingly popular because of the changing nature of how lenders operate.

The properties you see at auctions are normally ones that have been repossessed because a person could not afford to keep up with their mortgage repayments. So it is the lender that is putting the property up for sale, and they will want to sell it quickly.Most properties will have a reserve price on them, which is normally the lowest price that the lender wants the property to be sold for, however if at the end of the auction it has still not been sold you may be able to contact the lender directly and offer them a price.All types of properties go under the hammer at auctions, ranging from a derelict one bedroom flat, to a five bedroom detached house.Auctions are increasingly popular with developers or first-time buyers wanting to buy a property and do it up.

What you Need to Know

The key to success at auctions is being organised. You must first look in your local paper or on the internet to find out where a local auction is being held, you can then request a brochure, which will list all the properties. It is worth choosing a few that you are serious about before the auction and working out how much you can afford.You must also get you mortgage arranged before you go to the auction. It is no good buying a property on the day and then realising you have no way to pay for it, and remember, once the hammer goes down, you have entered into a legal contract.

It is also worthwhile visiting the property before the auction and having a look around it if you can, as things can often look a lot different when you actually see them in person. If you are serious about the property you might also like to get a survey and valuation carried out on the property incase there are any hidden problems you need to know about.You will need to have a 10% deposit ready to pay on the day of the auction should you be successful, you will also need access to the remaining 90% of the property's value within 28 days, so it is vital you are organised.

It's a sad fact that repossessions are on the increase, but it does mean there is huge potential to snap up a bargain at an auction. Auctions are not something to be scared of, everyone worries that they will accidentally scratch their nose and end up buying something they don't want, but the chances are everyone in the room will be just as nervous as you. As long as you do your homework correctly and don't get carried away on the day, there is no reason why buying at auction shouldn't be for you.

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