House Auctions – The Good, The Bad and The Ugly
Searching through current house auctions lists is without doubt one of the best ways to find cheap houses for sale. Whether you’re looking for investment properties to do up and rent out to tenants, or simply want to buy a new house at below market prices, then researching house auctions is the way to go to find the perfect property for your needs.
With over 35,000 properties coming up for auction every year it sounds like it would be rather easy to find a cheap house, in the right location and at the right price. Just do a Google search, find out what house auctions are coming up in the near future, browse through the properties on offer and find your ideal house, flat or business unit. Well, unfortunately it’s not quite that simple, though we think it definitely should be, hence the following guide on everything you need to know about buying at house auctions.
One of the difficulties is that with many hundreds of property auction websites around on the internet it can be hard to know which sites are reputable, which will deliver accurate information and which are free to use. Numerous auction information websites charge a subscription fee to users just to view the properties coming up for sale. This is a waste of money for those in the know, because information on which houses are available at auction can be found relatively easily and without any costs involved.
Stay well clear of property auction websites that charge fees to view lists of properties available or who promise to give you lists of properties before anyone else – all the information they charge a fee for is obtainable for free and totally gratis if you know where to look.
House Auctions – The Good
- Save Money – Of course, the best thing about buying property at an auction is that you can purchase houses, flats and commercial units at 20 – 40 % below the current market value, giving you plenty of room to profit even when renovation costs are factored in.
- Secure – With house auctions there is no risk of being gazumped (another buyer putting in a higher bid after the auction and you losing the property). The exchange and completion dates are both fixed when buying at auction, which means less stress and worry when compared to being in a chain. Housing chains of buyers and sellers can easily collapse and cause innumerable set backs – buying at house auctions completely avoids this aspect of buying property that those who choose the traditional route will, more often than not, have to go through.
- Cheaper Fees – Many of the auction houses simply charge an administration fee of around £350 (though some do charge a buyers premium, so make sure you check before the auction). With no estate agents fees to worry about, buying at auction is usually quite a bit cheaper than buying through the normal channels. This is because most auction houses get their income through charging a % of the sale price from the seller and not the buyer.
- Time Saving – Buying at house auctions can save a great deal of time when compared with buying through estate agents. You won’t be traipsing around looking for the best agent or spending every weekend going from one house to another. Just check out the homes available and pick a few that you’re interested in and go from there.
- Plenty of Choice – When looking through house auction lists you often find different styles and types of property, with unique or unusual features, such as old churches, unconverted barns or even disused water towers and electricity stations.
- Convenient – House auctions take place throughout the country and sometimes they can be hard to get to so for convenience you can bid by phone and in some cases via the internet, so no matter where you are you can bid on the properties that you’re interested in.
When you’ve found an auction property that you’re interested in, contact the auction house directly to request any further documents relating to the property including the legal pack. Most auction houses will send you information via email.
Do your research thoroughly. Find out from local estate agents websites what homes in that area are selling for.
If you are unsuccessful in buying the property you wanted and you are open about where you want to buy, ask the auctioneer afterwards about any properties that didn’t sell. You can pick up a real bargain in this way, just make sure you do all the checks you need to do before agreeing anything.
House Auctions – The Bad & The Ugly
- Stay in Control – Going to house auctions is exciting and our emotions can run away with us, so make sure you stick to the upper limit you’ve set yourself and try not to get caught up in the atmosphere too much. Remember that the auctioneers job is to get the highest price he or she can and they are very skilled at this – stick to your budget no matter what.
- Problem Properties – This is only a risk if you have not done the research into your property by visiting it previously, getting a survey and making certain that any problems such as subsidence, dry or wet rot can be rectified within your budget. If you fail to do your research you could find that your “cheap house” ends up costing you a lot more than you planned.
- Rigid Contracts – As soon as that gavel falls you have entered into a contract to buy. If you change your mind after the auction or you cannot secure a mortgage you will lose your deposit. So make sure you already have a mortgage offer in place before the house auction.
- Lease Lengths – Do check the length of the lease on the house you’re interested in. Properties with short lease lengths are often the cheapest, and while you can get a great deal on these homes, ensure that you’ve checked thoroughly beforehand to guarantee that you can get the lease extended when you want to. If you don’t and find that you can’t get the lease extended then the property will go back to the lease owner at the end of the lease term.
Ensure you have a mortgage offer before you go to auction.
Ensure you visit the properties you’re interested as early as you can. This will give you the opportunity to organise surveys and allow you to view the property, warts and all.
Cost of Buying at House Auctions
10% Deposit required on the day of the auction
Auction House Admin Fee (usually around £350)
Mortgage Arrangement Fee (with your bank)
Solicitors Costs – to carry out local and national searches and check the title deeds for any covenants or restrictions on the property.
Possibly a Buyers premium of around 1.5% of the sale price
When buying at house auctions you will be required to pay by bankers draft or cheque in most cases. Cash or cards are frequently not accepted.
On the day of the house auction you will need to take several forms of identification including a passport or photo driving licence and your latest utility bills or council tax bill.
House Auction Websites that Provide Free Information
UK Wide House Auctions
So Are House Auctions for You?
The initial foray into buying at house auctions can be a little intimidating. There’s a bit to learn about how the process works, but not certainly not enough to put people off using house auctions to buy their next investment property or dream home. First time buyers may be the least likely to purchase property from house auctions but it is a wonderful way for them to get onto the property ladder and get a cheap house that will only grow in value. Whatever you decide, just make sure you do your research – this makes buying property at house auctions a real piece of cake.