We’ve all seen the programmes on daytime TV – Homes under the Hammer and so forth – there are more and more of them popping up discussing the housing market and how buying via auction can sometimes be quite lucrative. With all things considered – and with the housing market the way it is right now – is it still worth buying a property at an auction? If so, what should we be looking for?
I’ve recently interviewed an auctioneer – one who has been in the trade for over 30 years – and during our chat, it became apparent very quickly as to what he considered to be the key factors driving property sales and purchases in the auction format. Believe it or not, greed comes into play quite a bit! I was surprised to hear that the want for more money spurs sellers on to host their properties in this format – therefore getting the best deal by selling it under the hammer – while those actively wanting to buy a property think the same.
Bidding on properties at auction breeds a fear of loss – and auction houses can, therefore, play on this to bid up such purchasers – with great skill, I might add. All this talk of auctioneering was far too fascinating – I was keen to find out as much information as I could on the auction scene as it remains a bustling side to the property market that lives and breathes well outside of the confines of daytime TV.
So, this begs the question – why do so many people sell and buy properties at auction – thirst for cash aside? There are, of course, a number of explanations. Auction houses will be keen to advise that auctions are transparent and plain to see for all comers, of course – but I think there’s another side to property auctions that really pulls in the punters.
The properties listed at auction are, of course, exclusive – and therefore, lucrative purchases should you wish to get in there quick and bid. The only way you’ll be able to acquire these homes is to attend and bid – essentially playing the game. Take it from me – auctions can be a lot of fun – even if you just attend to watch the bidding action escalate! I think it’s great entertainment – even if you think I’m rather sad for saying so!
If you’re interested in taking on your first property auction and putting in a bid or two, there are a few things you should bear in mind before starting.
- Do view the property you’re interested in bidding on where possible. Many auction houses will offer restricted viewing – meaning that you should get in quick!
- If you’re lucky enough to secure a preview, consider why the seller has taken to the auction circuit – the owner wants a quick sale – is it in need of a lot of repairs? Are they motivated in other ways? Consider these points, as you may be unable to secure the property if too much work is required on your part.
- However, a property that is in disrepair or up for quick sale for an obvious reason may be a lucrative buy if you have the capital. A non-mortgageable property will have fewer people interested – and the owner may not necessarily want a lot of interest from those who could renege on a transaction.
- Make sure that you obtain a legal pack for the property. The auction house in question will likely be able to provide you with relevant documents online. Read the paperwork provided yourself and make sure you check the address – then, if need be, it may be useful to request a solicitor to help you go through the details to make sure you’re fully aware of what you’re getting into. I am sorry to say that most solicitors will charge for their time – but most will be able to highlight any potential legal issues within 15 to 30 minutes.
Coming back to thinking about why people choose to sell via auction house, it’s also worth considering that a property may be unable to sell on the marketplace due to its location or damage from fire or water. It could also be marketed by a trustee in possession – if the current owner has failed to keep up with mortgage payments – meaning that the outstanding debt must be recovered by selling the property as quickly as possible.
This can, of course, be achieved through property auction. Auctions may see properties go for less than their true market value – however, a price is arranged and agreed within the shortest time period possible, and the mortgage company or bank involved can be seen to have been transparent in their sale. Therefore, all dealings related to recovering of debt and fees – as well as their dealings with any owners – are out in the open.
Another reason for sale motivation is based around family. For example, families who have lost loved ones may wish to press for a quick close on a property sale – as they can, therefore, all benefit from the proceeds of such an auction.
Auctioning properties – buying and selling – can be driven by greed setting in. However, the property auction remains a lucrative and popular set-up for buyers of homes with character – and for sellers looking to close a deal sooner rather than later, they can command a deal on the day to clear debts, to release the property for instant cash, or maybe even to hike up the asking price.
I say you can do worse than go along to a property auction to see the action for yourself – and if you have the money available, why not see if you can snap up a worthwhile bargain? Don’t forget, however – check all the legal documentation, get a preview of the property and consult a solicitor wherever possible before starting!
Managing Director, Family Homes