What is the 1st step when buying property at auction?

Blog Post

What is the 1st step when buying property at auction?

13 December 2016

 

The 1st Essential Step for Success: Research the Market

What type of lots go to property auctions?
Every year thousands of properties are marketed for sale via auction for many different reasons. Approximately 50% of the lots are vacant flats and houses, most of which need  modernisation. 25% are residential investment properties, and the balance is commercial lots. In the mix may be a smattering of churches, pubs etc and other interesting buildings.

Typical vendors and why they use auctions
The vendors at auction include banks and building societies, receivers and administrators, property companies of all sizes, local councils, utilities and public authorities, executors and trustees, private developers, investors and occasionally home owners. Auctions tend to be the chosen method of sale by those who want to take advantage of the speed of sale with the exchange of contracts taking place on the fall of the gavel and the completion that is normally four weeks later. In addition, the transparency of the auction room in deciding the market value of the property is desirable for many vendors including public utilities, charities, local authorities and other similar bodies.

Finding the right property
With the thousands of properties going to auction across the UK every month, do your research regularly to find out about the properties coming up that fit your search criteria. The auctioneer’s website and catalogue provides a lot of information about the properties and is usually available 2-3 weeks before the auction. A trend that is increasing is that some auctioneers release the lots as they take them on rather than wait for the catalogue to be ready for printing, giving more time to those who know about them to do their due diligence. The reason for the property sale may be indicated in the catalogue, as well as a guide price. It is a good idea to look on the website or get a copy of the auction catalogue quickly and register your interest in the property with the auctioneer to ensure you are kept up to date with any developments. Be aware that guide prices may change right up until the day of sale, properties can be withdrawn and sometimes sold in advance of the auction.

It is also important to realise that whilst the vast majority of estate agents only offer properties within a small radius of their office, auctioneers offer lots from a much wider area and in the case of London based auctioneer's all over the country.

The quick search option

If you were looking for a flat or house for sale by private treaty would you in the first instance go to all the local agents in the area or go to a major property portal search like Zoopla or Rightmove? You would of course normally go to a national portal that lets you view the whole market and makes the best use of your time. The same applies to property auctions and it is even more essential given the short time period between catalogue release and auction day which is why the EIG elert service is so popular as users are notified as soon as properties that may be of interest to them are released onto the market.

EIG is the only portal with information on every property coming to auction and the only portal where one can look up sold prices for auction lots.

When deciding whether a property is worth pursuing, first, consider the guide price of the property (remember this is an indication of the reserve price, not what the property will sell for). Second, establish the likely value of the property so that you can gauge what the property may sell for at auction and whether it is within budget.  

 

Look out for the next blog in the series which will be taking an indepth look into:

The 2nd Essential Step for Success: Investigating the property of interest thoroughly prior to auction day.


By Beth Fox