Auction Property – Are They Worth Buying?

As with anything bought at an auction, property has its good points and its bad points. Some auction property turns out to be what can only be described as a real bargain while other properties cause more trouble than they’re worth. The key is to decide beforehand just how much work and money you want to put into a property and then stick to the decision.

Doing the Checks

Auction property is only worth buying if you can quickly get it into a rentable condition. It’s all well and good buying a repossessed property at auction for 50% of its market value but if it costs you thousands and thousands of pounds in renovation costs and upwards of six months to complete the work the property won’t actually be that much of a great buy.

At the very least you need to have surveys done before buying any auction property. If you can, you should also hire a builder, an electrician and a gas engineer to look over the property before the auction date. These professionals will quickly determine if there are any huge hidden costs associated with the property that may not have been picked up on a general survey.

Set a Budget

A lot of auction property is worth buying but you need to find one that isn’t too expensive and at the same time doesn’t need too much work doing to it. The top condition properties will obviously have the highest price tags but this type of property rarely needs more than a coat of paint before it’s ready to rent. Low quality properties on the other hand require extensive work but you can pick them up for more than 50% less than their market value at auction.

You need to set yourself a budget and stick to it. Don’t get carried away at the auction and buy a top quality property you can’t afford or a poor quality property that will take months to renovate. Expect to have to fit a new kitchen, bathroom, boiler etc. and factor these costs into your budget.

Aim for the middle ground and you’ll often find auction property that is rentable within 3-4 weeks of the purchase and that doesn’t cost the earth to buy. Be aware though that other landlords in your local area will also be interested in this particular type of auction property, so expect to pay a little bit more than the auction guide price.

So, back to the original question – is auction property worth buying?

Providing you don’t go above your purchase budget and you don’t buy a stinker of a property that needs more spending on it than you save on the purchase price then yes, auction property is definitely worth buying. At the right auction you can often save 30-40% on the market value of a property which means even if you spend 10% of the market value on renovations you’re still quid’s in on the deal.