First time buyers in the UK are entering a competitive market, marked by uncertainty and high property prices. April’s stamp duty changes and the Brexit vote in June 2016 made buyers more reluctant than before to invest in a property. With house prices across England surging by 7.7% and in London by 7.5%, can auctions offer buyers a more advantageous deal than real estate agents? We think so. First time buyers can get on the property ladder easily and beat the competition by bidding at auction.
Even in an uncertain market where one in three purchases fall through, auctions provide the security and the speed that sellers and buyers seek. As soon as the hammer comes down, the buyer enters a legally binding purchase, and the entire process takes 28 days from exchange to completion. With properties at auction being up to 30% cheaper than if bought through a regular estate agency sale, the option is an especially attractive one when investing in a first home.
As London’s fastest growing auction house, we offer guidance to first-time buyers who wish to understand auctions better. Given the very short timeframe for completion, we advise potential buyers to ensure they have a mortgage in principle before buying a property. For first time buyers who worry about arranging finances before auction, bridging loans exist to tie things over. Young buyers may also wish to consider Help to Buy ISAs, a scheme introduced by the government to support savings for a first home.
First time buyers frequently assume that auction properties have a legal issue. This is not the case. Auctioneers are legally required to provide a legal pack and fulfil the government’s Anti-Money Laundering requirements, in the same way that a real estate agent must. Nevertheless, we advise all buyers to secure the services of a solicitor and scrutinise the legal pack carefully before putting a bid forward.
The tightness of the timeframe should not deter first-time buyers either. Securing the finance to buy in auction should be as straightforward as buying through an estate agent. Equipped with solid research and legal advice, potential bidders should embrace the buzz and frenzy of an auction house and put their best bid forward. They are likely to keep more money in their pocket than if opting for a deal with real estate agents. First time buyers, now is your time to enter the auction room.