Property Auctions Overview

Property auctions in the UK all run along the same lines; the main difference between one and the next being the number of properties included and the prices they sell for. Auctioneers in the big cities will generally hold more property auctions per year than those in smaller cities, towns and rural areas but there are very few places in the UK where property auctions are never held.

 

The Properties

The properties that are sold at property auctions in the UK come from a variety of sources. Most are repossession properties referred to auction houses by banks and building societies. Others are inheritance properties being sold by the new owners for a cash profit and others still are properties being sold by the owners in order to avoid repossession.

The Purchase Prices

Investors who attend property auctions in the UK do so because they know they can save many thousands of pounds on the price of a property. Generally speaking, auction properties sell for between 30% and 50% less than their estimated market value; the exact saving you make depending to a large extent on the condition of the property at the time of the sale i.e. those properties in disrepair sell for much less than those that are virtually ready to rent when bought.

The Auction Day

More and more property investors have started to realise the potential that property auctions hold with regards to savings. This means that property auctions in the UK are now extremely popular and it isn’t unusual to find yourself with stiff competition for a decently priced property in good condition. Not only will you have to contend with other bidders in the auction house on the day, there will also be telephone bidders and pre-bidders to outbid as well. Any guide price or reserve price put on an auction property should be taken as the minimum you’ll have to pay…unless of course the property requires extensive work and then you might be the only one bidding on it.

The Finances

Auctioneers that hold property auctions in the UK have very definite terms and conditions regarding payment. Every auction house requires 10% of the purchase price to be paid on the day of the auction as a deposit. This deposit is non-refundable so if you don’t manage to pay the remaining 90% within the following 28 days you lose the money and the property goes back into the next auction.

The remaining 90% of the purchase price can be paid with either a mortgage (most commonly a buy to let mortgage) or if you have it, cash. Again it is worth noting that you only have 28 days to pay the balance so it’s advisable to get a mortgage in principal before auction day.

Finding Property Auctions in the UK

Auction houses commonly advertise their up-coming auctions in local newspapers, trade newspapers and magazines, and on their websites. Conduct an internet search to find auctioneers in your area and either contact them directly for the latest catalogue or visit their website to find details of the properties they have available.  

The more you can find out about property auctions in your area and the properties an auctioneer has for sale the more chance you have of bagging a bargain. If you are thinking of attending an auction make sure you research auction day strategy carefully and get your finances in place before you go…just in case you do find the property of your dreams.