Yahoo Finance Buy your next home at auction - it's simple, quick and you may even bag a bargain
When buying at auction, no one pays over the odds because every bid is known to every bidder, the whole process is over in three minutes, and if you’ve promised the highest amount the property is yours – by law.
Of course, there is a little more to it than that. But compared to buying a home through the conventional route – where everyone in a chain must be ready to go simultaneously with no last-minute cold feet or gazumping – the auction process is transparent and simple.
Little wonder 30,000 homes went under the hammer last year with sales totalling £3.5 billion, four per cent higher than 2015. Those figures from the Essential Information Group, which is a sort of Rightmove for auction properties, may well be beaten this year.
“Auction is the first property sector to re-establish itself to the sales levels we saw before the referendum. No longer are auctions a last-resort route to market – in fact, they’re now the go-to place to sell properties for improvement or development,” says Roger Lake, founding director of Auction House, the UK’s largest residential auctioneer.
Savills, another auction firm, says its average sale price in the first quarter of 2017 was £376,000 compared to £310,000 during 2016, while rival auction firm Clive Emson enjoyed £20 million of sales at events around the country in March, a 30-year record for the company.
It’s not just dilapidated wrecks at auction, but there is a wide range of homes on offer, including some perfectly finished houses
The reason auctions are arguably more popular than ever is not just the simplicity of the purchasing process, but the chance they give buyers to bag a bargain. “Vendors opt for an auction when they’re confident there’s huge interest, where a property is a restoration or rebuild, or where it’s so unusual that no one can establish a value,” explains Rachel Johnson of Stacks Property Search, a buying agency which advises inexperienced newbies on how to approach purchasing at auction.
It’s not just dilapidated wrecks at auction, but there is a wide range of homes on offer, including some perfectly finished houses.
Among the properties on sale at Auction House events in the coming weeks are a two-bedroom Grade II listed house in Winchester at £450,000, and a farmhouse requiring renovation at Attleborough in Norfolk, expected to reach between £275,000-£325,000.
If you take the plunge, your rival bidders are likely to be a diverse group. Most auctions have a smattering of first-time buyers happy to renovate a home in return for a low price; there will be buy-to-let landlords, also prepared to improve their purchase but wanting it ready to let quickly; finally there will be developers – some amateur, some professional, and all keen to do a comprehensive refurbishment with the aim of reselling at a profit.
“It’s not as nerve-racking as you might think. It’s not a case of one twitch and you’ve bought yourself a mansion in Mayfair, but you must do your homework,” says Chris Coleman-Smith, director of national auctions at Savills, who also wields the gavel.
His advice to buyers is to get their mortgage or other funding in place then check the auction catalogue online or in hard copy a few weeks before the event. Line up a solicitor familiar with auctions, too, and download the auctioneer’s legal pack, then view the properties you like the look of. Obtain a survey on the one you want to buy, if one is not arranged by the auction house itself. Then, of course, attend the auction event in person.
Even in the slow summer months there are around 10 auctions a month around the UK, typically in large hotels and each with 50-150 “lots” or properties on sale. You can sit in on an auction without bidding to see for yourself – they’re normally friendly and occasionally feverish.
“Decide in advance the maximum price you’re prepared to pay and don’t be caught up in the moment and go above the figure,” cautions Stacks’s Johnson. She says bidders should sit where they can see any rivals and, if bidding is slow, they should not rush to make the running and inadvertently push up the final price by over-enthusiasm.
If your bid wins you must pay 10 per cent immediately and, typically, the rest within 21 days, all with little of the lengthy uncertainty of a conventional purchase.
Register Log in commenting policy
