Why Pay The Asking Price?! Everything you need to know about Property Auctions

Should you avoid the open market & buy a property at auction?

Property Auctions

Property auctions may the way to go if you’re looking to get a foot on the property ladder or sell your house quickly.

Question is though, are they right for you? And what are the benefits of buying a house at a property auction?

 

Is property investing right for you?

Investing is usually a good idea – financial experts will always tell you to diversify your savings.

Of course, you need an emergency fund. That’s usually between three to six months of wages. Just in case you find yourself unemployed or dealing with an expense you hadn’t planned. Let’s face it. With everything that is going in that is highly likely to happen.

But once you’ve got your emergency fund in an easy access savings account, there are far more options when it comes to your money. Investment’s give you the opportunity to make your money work harder. Often, the earning potential is much higher than that of a high street savings account.

With interest rates falling, investing is something that should be on your mind. So, what can you invest in?

Common investments include:

  • Stocks and shares
  • Gold
  • Property
  • Collectors items (classic cars, wine, etc)
  • Bonds

 

Why You Should Invest in Property

So, why should you invest in property? Well, for starters their potential for growth is huge.

Despite property prices fluctuating in value, the growth of the property market has been consistent over the years and can often deliver a far better return than your average savings account – plus, it’s far less risky than other investment alternatives, like stocks, bonds and cryptocurrencies etc. Properties also become an asset. Yours to sell, rent, or do with as you please until you are ready to cash out. Sounds dreamy, right? So why isn’t everyone doing it?

 

How Much does the Average House Cost in the UK?

Unfortunately, investing in property doesn’t come cheap. For those at the start of their  journey to financial freedom, you may want to consider smaller investments.

The average house in the UK costs just over £231,000 and even with the help of a mortgage, coming up with the initial deposit is hard. And even then you’re left with monthly mortgage repayments – a large proportion of which is interest – which could prevent you from taking advantage of other short-term investment opportunities. And all this talk of payments beggars the question,  how much you would need to earn to buy a house in a popular area?

But, that’s not to say there’s isn’t an alternative way to invest in property, which in many cases can prove to be cheaper and eradicate the need for a mortgage. Que property auctions.

 

What is a Property Auction?

A property auction is an event that allows individuals to bid for houses – houses that will often be sold for far less than their value.

Properties can be auctioned for a number of reasons. Most commonly, homes will be listed for auction because of the homeowner has either being able to make repayments on their mortgage or because the seller just wants a quick sale. Something that’s hard to find through the open market.

Property developers can also be found buying houses at auction with the intention of flipping them to make a profit. Often this works well and is a proven strategy, however it is sometimes hard to gauge how much work a property needs before it can be put on the market, so if you’re thinking of dabbling in development through auction, we’d highly suggest doing your research first.

But that’s not to say that the benefits to buying a property at auction are limited to developers. Discover just some of the benefits  to property auctions below…

 

Property auctions eliminate lengthy negotiation periods

When you buy a house at a property auction, there is an immediate handover. You’re not stuck in a chain, wrestling with other buyers and sellers and arguing over a completion date. Properties bought at auction are yours and yours only, providing you’re the wining bidder. Something that can save you a lot of time and stress, especially when you compare an auction purchase to the open market.

For sellers, property auctions make a lot of sense. Although you might not achieve a figure as big as you would on the open market, you’re more or less guaranteed to sell your property fast.

 

Buying through auction gets your property marketed intensely

Property auctions take a lot of the hassle out of property sales. Gone are the virtual tours, viewings and all the time consuming marketing methods, in exchange for a rather simple concept. Sell your house quickly and draw a crowd by limiting the time for which it’s available.

Property auctions draw huge crowds thanks to the organisers’ intense marketing campaigns, encouraging many to come along in hope of grabbing a bargain. Auctioneers benefit from every sale through the commission, so it’s their responsibility to attract a room full of motivated buyers. As you can imagine, such an atmosphere encourages buyers to make decisions… fast.

 

Property auctions are great value

Houses are expensive assets – the purchase process isn’t cheap (conveyancing, marketing, buyer’s auction premium etc.), and neither are running costs and maintenance. But this doesn’t mean auctions are expensive, quite the opposite. Usually properties at auction go for significantly less than market value, so even with costs like a buyer’s premium factored in, they can still mean you walk away with a bargain. All of which can make it easier for young first time buyers to get on the property ladder without a mortgage.

 

Property Auctions: Are they worth it?

Ask us and yes, in most cases property auctions are a good option if you’re looking to invest your money in property.

For buyers, they allow for a quick purchase, typically include more ‘fixer uppers’ than the open market and most of the time can throw up a bargain, especially when the auction room is quiet. Whereas for sellers, they allow for a quick hassle-free sale, cut the need for viewings and the ability to withdraw their equity fast.  And even in the event that you’re not looking to invest in property just yet, property auctions are still a great ‘go-to’ place to suss out the condition of the housing market.

Got an interest in property and want to share your views? Get in touch with our editor here.

Myles is a first class ‘word nerd’ currently working at the heart of the property industry. He’s particularly passionate about all-things property, interiors and D.I.Y.

Be sure to connect with him via LinkedIn.

About Myles Hemingway 6 Articles
Myles is a first class 'word nerd' currently working at the heart of the property industry. He's particularly passionate about all-things property, interiors and D.I.Y. Be sure to connect with him via LinkedIn.

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