Auctions are often believed to be brimming with affordable homes just waiting to be snapped up. However, unless you take great care, you may find yourself paying over the odds for auction property.
After all, online and in-person auctions are becoming ever more popular. This means a greater amount of competition and a higher likelihood of bidding wars. This can push prices up – to the extent that many houses sell for more than their fair market value.
In this article, auction house and quick sale experts Property Solvers provide a few handy hints and tips on how to find cheap auction property in the UK.
Finding Cheap Property for Auction
With UK house prices currently high, everyone is looking for a good deal – whether they’re a first-time buyer, an investor, a developer or a current homeowner.
This means that you may need to use some clever techniques when attempting to buy cheap at a property auction.
Much of the process involves picking out properties that fit the bill.
Here are some of the approaches you can take…
Play the Numbers Game + Always Be Looking
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Do Your Research
Scour the auction listings way in advance, looking for cheap auction property for sale. You may find an affordable foreclosed building or a house that has a low guide price for a quick sale.
Check out each property’s “guide price”. This is the lowest amount a seller will be willing to accept.
Attend Viewings and Arrange Surveys
It’s important to understand the fair value of a property before you bid on it. If you don’t, you may find yourself paying way over the odds. Arrange to visit properties in which you are interested to inspect for structural issues and other problems that may bring the price down.
You can also hire a surveyor to get you a clear impression of its value. Surveyors can help in other ways too. For example, they can let you know what renovations you’ll need to undertake to make a property liveable or add to its value.
After all, maintenance and repairs should be factored into your budget. If a property needs a lot of work, it may be out of your price range after all.
Look for the “Wrong” Property
Many auction houses or sites specialise in a particular kind of property. For example, you’re more likely to find domestic buildings that are “immediately liveable” online, while in-person auctions tend to focus on fixer uppers, niche opportunities and tenanted homes.
If you’re able to find a lot that doesn’t seem to fit with the rest, you may be in luck. Other potential buyers are likely to bid on the less “unexpected” lots, which means a lower risk of a bidding law on a property that doesn’t quite fit.
Wait it Out
Some auction lots command more interest – and so receive more bids – than others.
If you can find a property in which little interest has been expressed, it may sell for much lower than market value.
Of course, people may be avoiding it because it has serious problems, so it’s definitely worth arranging a survey and getting a solicitor to look through its “legal pack” well in advance.
If bids are low and few, the auctioneer may drop the guide price to encourage more activity. This could be the time to pounce.
However, an auctioneer may withdraw a lot with low interest from auction, meaning you’ll have missed this opportunity. There may be others, though.
Approach the Seller After Auction
If a lot fails to sell or is withdrawn due to lack of interest, you may still be able to buy it.
To do this, find the seller’s information after the auction and contact them separately to make an offer. They may be keen to get rid of the property – and so you may find them willing to negotiate with you and let the lot go for lower than their initial guide price.
You may also decide to approach the seller before their property goes to auction. If you feel that the guide price is very reasonable, and that a bidding frenzy is likely to occur, it never hurts to get in touch and attempt to make an offer early.
The seller might be happy to speed things up, and may just accept.
Plan your Bids Carefully
Try not to set your heart on a single property. Other potential buyers may be vying for it too, and their bids could push it beyond your price range.
Don’t let a sense of competition cloud your judgement. Instead, decide how much you are willing to spend way in advance.
Ideally, you should come up with a low bid, a mid range bid and a high bid, and you should never allow yourself to be pushed beyond your limit. After all, if the seller accepts your bid, you will be legally obliged to go through with the purchase.
There are other ways to buy cheap property besides auction. Contact Property Solvers today to find affordable homes for sale. We can also buy your house – providing an up front cash offer worth up to 75% of its market value and closing in as few as seven days.