Auctions can be a good way of investing in property. Although bargains are getting harder and harder to find these days, they are still out there if you are prepared to do your homework. If you are keen to make money out of property and achieve the maximum ‘property profit potential’, renovating a run-down property can still be your best bet and you can find these types of properties at auction. It is important, however, that you follow certain rules and stick to them, no matter what.
What Type Of Property Goes Under The Hammer At Auction?
The properties on offer at auction can range in price from £3,000 to £4m +. They can be flats, houses, residential or commercial. They can be barns, windmills, water towers, houseboats, lock ups, land and public conveniences! They can vary in how much work they will need. Some will only require a simple cosmetic job, whilst others can be a complete wreck needing total refurbishment.
Who Sells At Auctions?
Properties that sell at auction are generally those that you cannot buy through a traditional estate agent. Increasingly, properties are being off-loaded by councils and housing associations who are simply looking for the best price on the day. You will also find large houses that have been divided into bed-sits that could be turned back into single residences, or hotels that are long past
their sell by date and in need of total refurbishment. Other properties can be probate sales, whilst others can have title problems. Basically, properties for sale at auction are those where a quick sale is desired, or where getting a mortgage would be difficult and in some cases impossible.
Who Buys At Auction?
Developers/builders who want to renovate a property and then sell it on for a quick profit. People who are interested in the challenge of doing up a property from scratch to live in, so that they can design it exactly how they want it, without having someone else’s stamp on it. Buy to let investors and shrewd property investors.
How Do I Go About Buying At Auction?
First and foremost you must find out when, where and by whom the auction is going to be held and ask for their catalogue. Most property auctions will be advertised in property newspapers and some of the big agents run their own auctions, so it is worth making a few phone calls to established estate agents to find out what is in their calendar. Allsop & Co, the UK’s largest property auctioneer, provide online catalogues at
www.allsop.co.uk. It is
also worth checking with local auction houses to see if they have anything coming up and you can also try the Royal Institute of Chartered Surveyors. Useful websites are:
www.propertyauctions.comwww.auctionpropertyfor-sale.co.uk
I’ve Got The Catalogue And Am Interested In A Property, What Do I Do Next?
You must do your detective work and unfortunately this will cost you money.
- It is essential that you view the properties which interest you as soon as possible. Viewing arrangements can be made through the auctioneer.
- Check the legal documentation. For each lot there will be special conditions of sale, plus other documentation provided by the vendor’s solicitor. There may be a small charge to have this information sent to you.
- Instruct a solicitor to check that there are no problems with the title deeds or the purchase contract.
- Arrange to get a survey done. Ask your surveyor to do you a breakdown of likely repair costs.
- Arrange your finances. If the property is eligible for a mortgage, you will need to get a valuation done by a mortgage company.
What Does The Guide Price Actually Mean?
The guide price is the catalogue price. Guide prices are often deliberately conservative and often bear little relation to what the property, realistically, should be able to achieve at auction. Auctioneers do this to stir up interest in the auction and it is fair to say that no one, not even the auctioneer, can predict how the bidding will go on the day.