Auctions can offer a great buying opportunity
The reason why auctions can offer a great buying opportunity to people looking to purchase property is that in order to get a property listed in an auction you have to agree a reserve price in advance with the auctioneer and the auctioneer wants a reserve price which has got clear daylight between the perceived open market value of the property and the reserve price.
For example, if a local estate agent thought the property was worth £100,000 the auctioneer would want it reserved around £80,000, so if there was only one person bidding on the property it will sell on reserve at £80,000.
At auction there is a potential opportunity to buy properties at auction well below what people might think it is worth. All the vendors at auction are motivated vendors, they are selling because they want to and or need to.
Auctions are not for everyone
At most auctions on the fall of the gavel you have exchanged contracts, so it is imperative that you have done all your due diligence before hand and you might end up doing due diligence and then be outbid at an auction.
To minimise the chance of being outbid you have to have a realistic idea as to what it might sell for. Remember, the guide price is only an indication of the reserve not what the auctioneer expects to sell it for!
If you see a property coming to auction the prudent buyer would look on our site eigpropertyauctions to find out:
A) Whether it has been offered at auction before and is going around as second hand goods
B) What similar things have sold for and if similar properties are selling for more than you’d like to pay it’s probably not the lot for you!
David Sandeman - EIG Founder & Managing Director