Auction Properties For Sale
Auction properties are very appealing to those wishing to save money when buying a house, building plot or land. However sometimes buying an auction property for sale can sometimes be a double edged sword. This article discusses the highs and lows of investing in a property bought at auction, what buyers should be aware of before purchasing their house, land or building and the best way to approach buying a house from an auctioneer.
There are many property auctions happening all over the UK and people sometimes become blinded by the fact they are at an auction and assume this means the property will be selling for much less than it normally would, however this is almost never the case. Many factors decide how the bidding will go, such as the number of potential buyers present, the number of investors looking for more property to add to their portfolio and, of course, the heat of the bidding once the auction is underway. It is a myth that all properties sold at auctions are cheap, the factors mentioned often make sure they arn't as cheap as you think. Sometimes it's possible to pick up a cheap property for sale if you are in the right place at the right time but generally you should expect to pay more or less market value.
Auction Properties Can Be Expensive
Here is a good example of a property auction going the opposite direction to the bidders wishes. In 2010 there was a property auction in Stirling that was attended by many people looking to buy a cheap auction property in Scotland. One particular house caught the eye of quite a few people there. It was a secluded three bedroom cottage on the side of a small loch with no neighbours. The house itself was in need of renovationbut otherwise the location could be described as idyllic. That was the problem, many of the people at the property auction thought they were the only ones with the idea of buying it and the guide price of sixty thousand pounds only served to fuel their thoughts on picking up a very cheap house in a beautiful location.
The auctioneer started the bidding at forty thousand pounds and immediately a small group of people raised their auction paddles with wide eyes and high expectations. Within two or three minutes it was at the guide price and people were still bidding on the property. Looking over to the side of the auction house I could see a group of other bidders, waiting patiently for the novice bidders to run out of money. Once the house started to reach eighty thousand the real buyers started to place their bids and within another ten minutes there were ten people still bidding, the price now at one hundred and fifty thousand pounds. For those who has the common sense to conduct a survey, or at least view a property survey that had already been completed, the value of the property was established at one hundred and eighty thousand pounds. In the end after a fury of bidding for eager buyers with money, the cottage eventually sold for two hundred and eighty five thousand pounds. If you add on the auction fee for selling the house plus the money required for house renovation, it amounts to overpaying for a small cottage at auction.
Auction Property Sales
In the example above the people who attended the property auction genuinely believed the run-down, neglected cottage with a low guide price would be something nobody else would want. They probably had ideas of renovating the house and eventually selling their home in the town or city they currently live in and moving to their new dream home. It simply doesn't work like that. Property auctions can be fierce battlegrounds and they are no place for the faint hearted. The guide price usually means nothing and the house or land will almost always sell for three or four times the guide price. This is particularly true if you are purchasing a renovation property or a property for conversion such as a barn, outbuilding, water mill or windmill for sale.
Another major mistake often made by would-be buyers is the property finance situation. If you attend a property auction you must have the money ready to buy the property. This is not an option and you can't expect to look for a mortgage after you have won the auction, the funds must be in place to pay the auctioneers for the property, usually within seven days of the auction. Whilst you may be able to obtain a pre-approved mortgage from your bank you must make sure you have all the finance you need to purchase the property. If you do have bank finance or a mortgage make sure the bank knows exactly whats going on when you attend the property auction and stick to your limits - really, stick to your limits when buying auction properties.
Buying Auction Properties
Buying auction properties isn't all bad, in fact it can be extremely rewarding if you are patient. Houses, flats, buildings and land wind up at auction for may reasons. Some may be repossessions and put up for aution by the bank. Others may have appeared due to a death in the family, or perhaps the estate of the person went to the crown where their property may be auctioned off. If you attend enough events and do your homework it really is possible to pick up a fantastic bargain as long as you are aware of the consequences of bidding. Find out more about auction properties in the UK by following our guide to house and land purchase. If you are interested in commercial property auctions we will soon have a seperate section devoted to commercial property.
Auction Properties For Sale