Are Properties Cheaper at Auction?

It’s always extremely gratifying to find affordable property – particularly if it’s in great condition

This is the case whether you’re a house hunter looking for a home on a budget, or a property investor seeking to make a low investment for a high potential return.

The challenges that exist in all markets mean that people are turning to less traditional routes to look for cheap property. It appears that property auctions across the UK are currently growing in popularity, despite the potential risks they can present.

But are prices usually cheaper at a property auction? In this article, the team at Property Solvers explores this question in depth.

Can You Find Cheap Auction Property in the UK?

Is is absolutely possible to pick up property for below market value at auction. However, it depends on a wide range of factors.

There are now more ways than ever to access property auctions. This includes online, where auctions take place over extended periods of time.

What’s more, mortgage buyers are now permitted at auction in certain situations – although this approach can be risky (if the finance falls through, for example).

This means that, as a buyer, you’re now likely to have greater “competition” of different kinds when bidding on certain property.

However, if you’re savvy and undertake the right research, you may still be able to pick up a bargain.

How to Find Cheap Auction Property for Sale

There are a number of techniques you can use to find cheap property for auction. Here, we explore just a few.

Explore Auction Listings Online

It’s always a good idea to keep your eye on the guide prices of upcoming auction lots well in advance – you may find something for a great price that fits your requirements.

Remember to sign up to the major portals (mainly Rightmove + Zoopla).  The Essential Information Group (EIG) is also worth registering on which, incidentally, is the platform Property Solvers Online Auctions uses.

Check Out the Auction Properties and Their Local Areas

Undertake an in-person viewing of any auction property in which you are interested. This will help you to decide how much the place appears to be worth. Once you know, you won’t be tempted to bid too high on the day itself.

You should also investigate recent sale prices in the local area in order to compare them with the auction property.

It’s worth also chatting to local estate agents and other property experts who may be aware of auction properties coming to the market.

Investigate Guide Prices

What is a property auction guide price? The guide price will be among the first things you’ll look at when browsing an auction house’s listings.

It’s the minimum amount that a seller thinks they should receive for their house. Generally, any bids will be above this amount.

However, if it is fairly clear that a seller has overestimated the value of their property, it may command very little interest at auction. After all, auction buyers are often savvy to these matters. Should this happen, an auctioneer may seek to encourage bids by dropping the guide price.

If you think that a seller is asking too much for a property, you might want to stick around and see if you can grab it for less once its guide price drops.

Make a Pre-Offer

Conversely, you may be able to get a better deal by making a “pre-offer” – that is, getting in touch with the seller and placing a bid before the auction actually begins. Not all auction houses allow this, however, so it’s definitely worth checking beforehand.

If you can see that an affordable property has huge potential, it’s likely that other bidders will realise this too. As a result, the potential sale price may be pushed further and further out of your budget thanks to frantic bidding wars.

A pre-offer is a great way of avoiding that. Naturally, the seller can refuse – but it’s definitely worth a try.

Make an Offer on Unsold Property

If a property fails to sell, you may still be able to buy it. Some sellers will be open to negotiations once official bidding has closed, so you could consider approaching them afterwards with an offer that falls below the guide price at the property auction proper.

After failing to get rid of it once, a seller may be more keen to relinquish ownership of their property for a lower amount at this stage.

Factor In Repairs and Renovations

Remember, just because a property is cheap at face value, it doesn’t mean that you’re getting a great deal. Consider arranging a survey of a property in which you’re interested to find out how much it will cost to renovate. You may be faced with a very impractical sum!

You should also hire a solicitor to check out the property’s “legal pack”, to search for any loopholes, covenants or costly problems.

Property Type Makes a Difference

Depending on the kind of auction you’re attending, you may find that certain property types are more likely to go for bargain prices.

This is often different in online auctions and in-person events, and certain auction houses may specialise in particular properties.

For example, if you’re looking for a fixer-upper or a unique building, you may find that you’re up against more bidding competition at a traditional “in-person” auction – which could force prices up. At online auctions, there are larger audiences for homes that needs very little work.

A good technique is to look for properties that are in some way “wrong” for their auction house or style of auction, as they are likely to command less interest.

By following the above tips, you should be able to find a great auction property at a bargain price. Just remember to do your research and stick closely to your budget at all times!

For further assistance regarding buying or selling property, simply get in touch with Property Solvers today. Our friendly team will be happy to assist you.