What You Need to Know about Property Auctions in the UK
For both first-time and seasoned property investors, one of the best bets for scoring a great deal on a prize property is through an auction. An auction is a good place to start if you want to get up on the first rung of the property ladder. For the more experienced investor, auctions are also helpful in securing a reasonable property to add to your investments portfolio.
The greatest lure of auctions is that properties are sold at a price well below market value. How is this possible?
Well, most auctioned-off properties are repossessions and rundown properties.
Repossessions are those homes or properties than have been used as collateral for a loan which the owner defaulted on. Thus, banks or lending institutions have called in the loan and are now the new owners of the repossessed property. Since banks are not in the property business, they want to dispose of the property fast and recoup their cash investment. Thus, many of these repossessed properties are sold at auction for a bargain price and sometimes for a price well below market value.
On the other hand, auctions are also a great avenue to pick up a rundown property that you can repair and refurbish to sell at a higher price. The attraction of a rundown property is, of course, its very low price. Though it is unsellable in its current state, by doing the necessary repairs and a little fixing-up, that once-shabby house could turn into a dream home. Look for rundown properties that have potential and factor in the cost of the repairs to determine whether the asking price is still a bargain.
While auctions can be a great place to score a bargain and save some money, there are some things to keep in mind and be conscious of. A property auction is a heady and thrilling experience and most people get so caught up in the process that they end up paying more for a property than they would have liked. Remember that your ultimate goal at the auction is to score a bargain, and not win a game. Go to the auction house with a maximum price bid in mind and stick to it and stop when the price gets too high. Also, choose properties well. You do not want to get stuck with an investment that it impossible to resell. Stay away from properties that are in severe disrepair, have unclear legal titles or those without proper legal access to the property or land.
If you have never been to an auction before, then now is a good time as any. It is definitely a good idea to do a little visiting and scouting around to see how auctions all across the United Kingdom are being conducted. If you are a first-timer, check out the auction scene first and attend as a viewer and not as a serious bidder. Take an experienced companion with you or someone who knows the ropes of an auction sale. More importantly, research on your potential purchase. What is the current asking price of similar properties in the same location? What is the neighbourhood like? Determine neighbourhood safety, noise level and the adequacy of private parking as these are the usual clinching points that make the property easier to resell.
The greatest lure of auctions is that properties are sold at a price well below market value. How is this possible?
Well, most auctioned-off properties are repossessions and rundown properties.
Repossessions are those homes or properties than have been used as collateral for a loan which the owner defaulted on. Thus, banks or lending institutions have called in the loan and are now the new owners of the repossessed property. Since banks are not in the property business, they want to dispose of the property fast and recoup their cash investment. Thus, many of these repossessed properties are sold at auction for a bargain price and sometimes for a price well below market value.
On the other hand, auctions are also a great avenue to pick up a rundown property that you can repair and refurbish to sell at a higher price. The attraction of a rundown property is, of course, its very low price. Though it is unsellable in its current state, by doing the necessary repairs and a little fixing-up, that once-shabby house could turn into a dream home. Look for rundown properties that have potential and factor in the cost of the repairs to determine whether the asking price is still a bargain.
While auctions can be a great place to score a bargain and save some money, there are some things to keep in mind and be conscious of. A property auction is a heady and thrilling experience and most people get so caught up in the process that they end up paying more for a property than they would have liked. Remember that your ultimate goal at the auction is to score a bargain, and not win a game. Go to the auction house with a maximum price bid in mind and stick to it and stop when the price gets too high. Also, choose properties well. You do not want to get stuck with an investment that it impossible to resell. Stay away from properties that are in severe disrepair, have unclear legal titles or those without proper legal access to the property or land.
If you have never been to an auction before, then now is a good time as any. It is definitely a good idea to do a little visiting and scouting around to see how auctions all across the United Kingdom are being conducted. If you are a first-timer, check out the auction scene first and attend as a viewer and not as a serious bidder. Take an experienced companion with you or someone who knows the ropes of an auction sale. More importantly, research on your potential purchase. What is the current asking price of similar properties in the same location? What is the neighbourhood like? Determine neighbourhood safety, noise level and the adequacy of private parking as these are the usual clinching points that make the property easier to resell.
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