Buying a property at an auction isn’t exactly the “normal” way to acquire real estate. Properties usually come onto the auction market because they have been seized from their previous owners as collateral – usually as a result of non-payment of some form of debt. This makes property auctions a potentially lucrative way of buying a property, as the auction may not present the property at the same value you’d pay from a realtor.
However, property auctions come with their own unique set of circumstances when it comes to “putting your money where your mouth is”. As you don’t know exactly how much you’ll be paying for the property when you get it at auction, it’s difficult to arrange finance for the right amount in advance. This means you have to arrange finance after you’ve already won the auction – and with the tight timeframe auctions give you to pay, this can be a tricky task. Most property auctions give you a maximum of 30 days to provide the money to complete the purchase – not a lot of time to get a loan proposed, reviewed, approved and delivered!
As such, financing a property from auction is a tricky business that requires as much preparation as possible. Whilst you can’t plan for exactly how much you’re going to spend, it’s always wise to speak to a broker beforehand so that you can set a tentative plan in motion for your assumed budget. With that framework in hand, your broker will have a much easier time “getting the ball rolling”, so that you don’t have to rush to find finance in a very limited timeframe. It always pays to be prepared with finance, and auction finance is where this holds truest. It’s also one of the areas where you can get the most benefit from a broker. When you’ve got a tight timeframe and a hundred other things to organise along with your finance, having someone who can speak to the right people and arrange the finance for you can be a life-saver.