Buying at Auction Compared to Buying a New House
Buying at auction
A wide range of properties come up at auction, from repossessions to damaged buildings to entire blocks of flats. It's a good way of getting a quick sale without the chain and it's not just for property developers, everyone is welcome at auctions today as long as they have cash in hand. The cost of buying at auction largely depends on interest from other bidders but typically you can pick up properties at around 30% discount or as little as 15% in popular city areas.
Pros
Once the auctioneer's gavel falls, the house is yours, which means there's no risk of being gazumped.
Cons
You are responsible for carrying out a survey before you bid. The same goes for all the legal searches, so if you don't end up buying the property (you might be out-bid, for example), you lose the money.
If your bid is successful it's a binding contract – you can't pull out.
There is a lot to learn before you should place your first bid so make sure you carefully research this option first. For listings of nationwide property auctions you can take a look at The National Auctioneers Association website.
Buying a New House
Many new house builders offer special deals on first homes, from free carpets to white goods. They might even pay your five per cent deposit.
What it Costs
You will have to pay the full asking price for the house, but you are likely to save money on the added extras such as new carpets and white goods, which can run into thousands of pounds. Having your deposit paid could save you £5000 on a £100,000 house alone.
Pros
The initial deposit can be a big stumbling block for first-time buyers if you don't already have a few thousand stashed in the bank. And luxuries like new carpets are things most first-time buyers can't afford to consider.
Cons
You will pay a premium for buying a house that no one else has lived in, and it can be difficult to work out how much of what you're paying covers the fittings and convenience of moving into a pristine house. For further information you can check out the local press where developers will advertise new homes in your area and special deals.