Property auctions have the main advantage that generally prices are lower (sometimes up to 50% lower) than high street estate agents. Also, the auction process is quick and produces an instant sale. You know you have bought the property once the hammer falls. No making offers and waiting for a response, or being gazumped at the 11th hour.
Properties that you would not see in the high street estate agents find their way into auctions: distressed sales and "fire sales", repossessions, run-down and derelict properties, and often properties at auction are in need of some repairs or refurbishment. You are dealing in the trade or "wholesale" market here and you need to be prepared to roll your sleeves up and get your hands dirty! But, there's lots of opportunity to get a bargain and then add value.
Buying at auction can be a more risky process: you really do need to know what you are doing, to have done your homework (due diligence) and to have your finance arranged beforehand.
Contact the auction houses in the area where
you are interested in buying, most of them
have web sites these days, and get yourself
on their catalogue mailing list. Some
specialise in residential, some commercial,
but most will sell both.
Once you spot the properties you are
interested in, you need to act fast as there
will be a limited amount of time in which to
do your due diligence research and arrange
your finance before the auction takes place.
Property Auction Finance is normally based on the market value of the property, not the purchase price, which means if you spot a real bargain it is possible to achieve 100% funding on the purchase. It's vital that you are aware that normally you must pay a 10% deposit on the day of the auction. You have then committed yourself to going through with the total purchase within the timescale set - usually 28 days.
Finance can be arranged for residential and commercial property auction purchases. The type of finance that you need will depend upon the condition of the property you intend to buy and its subsequent use.
You need to discuss your purchase plans with an advisor to agree a finance plan of action to ensure that the right auction funding is put in place, in time and also the most appropriate long-term solution. This process involves the preparation of a surveyor's valuation report:
Commercial mortgages and finance can be arranged for
limited companies and for private individuals with good credit histories.
Even those with problem credit histories, county court
judgments (CCJ's), arrears or IVA's can be
accommodated.
Property auction purchases have become more
popular as demand for property and property
investment has increase over the last 10
years or so. The number of properties sold
at auction since 1999 has risen by around
70% - around 20,000 residential homes are
now sold through UK auctions each year.
This has undoubtedly had an effect on prices and in some cases properties at auction have been fetching almost retail prices you would expect to pay in the high street.
All the more reasons to use caution when buying at auction: calculate exactly what the property is worth to you and don't pay more.
What you should do:
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Buying Bargains at Property Auction by Howard Gooddie - Every week, hundreds of properties - both residential and commercial - are sold at auction in Britain. No longer the closed domain of property speculators and dealers, auction rooms are now filled by a growing proportion of private individuals looking for genuine bargains in the face of otherwise inflated prices in the property market. Property auctions are in author Howard Gooddie's blood. He comes from a family of auctioneers and was head of one of the country's leading auction houses. This guide features: How to find your bargain; Contracts; Finance; Bidding and winning your bargain; After the auction; Insider's guide to an auction house; Selling your property at auction Check-lists; and Directory of auction houses. More Information / Buy Now |
Information here is general only & believed to be correct, though we cannot guarantee it, nor do we accept any liability if you act or fail to act on this information. Always seek professional advice before making decisions. Investments can go down in value as well as up over time.
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