Auction properties are a popular choice for those creatively inclined. If you are the type of person who would love to leave your stamp on a property (and of course being good at it helps) i.e. a DIY guru, auction properties are not one to miss.
It is not uncommon to find significantly discounted, derelict properties which require some work (and money) that could then be turned into something amazing. As property auctions have been traditionally, the go to place for property investors who are looking for a hassle free, ‘off the shelf’ property where they can buy and rent out immediately – almost each auction leaves a number of ‘not so keen’ properties which could be snatched at a fraction of the cost if you know what you are doing.
No doubt you would have seen countless other ‘how to guides’ on the internet about buying auction properties, however we are attempting to consolidate a few factors which anybody can work out (with a bit of detective work).
The idea is that you can use all these points as bargaining chips to negotiate with the sellers and auctioneers a reduced price –
(1) Why are they selling?
Have the sellers had a change in circumstances? Has there been a death in the family or can they no longer afford the mortgage? If so, they might want the property sold even if it means they will not be making a return on their original investment.
(2) Are there obvious structural issues?
Is the property weather/water proof? Does the property still have a roof or has there been a lot of water damage? If so these works will cost a significant sum of money which you will have to bare. Would the sellers be willing to contribute towards these costs by reducing their price expectations?
(3) Why didn’t the property sell at auction in the first place?
Don’t forget, a lot of seasoned buyers at auction never miss one! Always think, why would they not have gone for the property you want? Are there structural issues, title issues or even over prized for what it is?
(4) Do you have funding in place?
Sellers who go down the Auction route are usually very motivated to sell. They all know and are pre-conditioned to the fact that once a successful bid has been made, then there is no going back. A failed auction therefore might be the perfect opportunity for bargain hunters who are prepared to negotiate hard. You might be some of the lucky few who might have all the cash ready but in case you are not, have a mortgage offer approved in principle. You will then know how much you can spend while also reassuring the sellers that you have the funding ready should they were to accept your offer.
(5) Pre-Auction Conveyancing Check
Know what you are buying! It is always not what it seems. It might very well be that the reason why the property hasn’t been successful at auction. Does the property looks structurally sound but are there hidden title defects?
Websites such as Express Conveyancing offer Pre-Auction Conveyancing Checks and also Auction Conveyancing at a reasonable cost. Always ensure you have had the title documents checked before you even consider bidding at auction. It is always worth spending a few hundred pounds on a property you want to buy, prior to making significant financial commitments and having to live with the consequences.