The main advantage of buying a property at auction is that you avoid the lengthy process of buying a house in the traditional way. At auction, the process happens in a matter of minutes rather than months and when the hammer falls, you own the property.
The other many benefits of buying property at auction are listed below. If these don't convince you, nothing will!
Auctions really do offer the chance to secure property at bargain prices. Thousands of properties are sold at auction in the UK every year – and many are hard to value, meaning they often sell at below market value. You will generally find that properties are competitively priced to sell rather than priced to sit on an estate agent’s books for months.
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The process of buying property at auction is quick and easy, a big attraction for bargain hunters. There is a fixed timescale from the outset. The auction date is set and the period from then to completion (if you are well organised, properly advised and have the requisite financial resources), is usually 28 days (20 working days) or otherwise stated in the special conditions of sale.
No fixed asking price
If you're the highest bidder, you could win the property at a lower price than you were prepared to bid up to. Once the hammer falls, this is a legally binding contract and the vendor has sold to you. They cannot continue marketing the property in the hopes of getting a better offer in the meantime.
No hidden surprises
UK auction houses should make all the necessary legal and tenancy documentation – from searches and leases through to planning permissions – available. Scheme layouts for development plans should also be obtainable and everything should be easily accessible, and downloadable from their websites. Familiarise yourself with the legal pack in advance and ask your solicitor to explain anything that you might be unsure of.
Always deal with the auctioneer direct prior to the auction – this way you can be sure you have the most accurate and up-to-date information.
Level playing field
You have as much chance of being successful with your bid as anyone else in the room. Most properties entered into auction are sold under the hammer on the day – although sometimes pre-auction offers are accepted by the vendor. As a buyer, you are in control, deciding when to bid and how high you wish to go, and in a transparent process, if your bid is
successful, then the property is yours on completion.
Investment properties are now regularly being sold at auction without vacant possession being obtained in advance. This is a win-win for both parties as the seller continues to get a rental income until the completion date, and the buyer starts receiving a rental income straight away, with no risk of void periods. This means you'll benefit from the investment from the moment of ownership, making any finance repayments easier.
Short-term lending facilities are usually available, which will allow you to complete on the property with temporary funding, prior to your preferred long-term mortgage being confirmed.