Buying at auction is just one way to buy a property. Find out if it’s the one for you, or whether you’d prefer investing in property another way.
There is a common preconception that properties sold at auction are either repossessed properties or problem properties. This is a complete myth which is slowly being dispelled.
Another misconception is that auctions are only for cash buyers, who know the auction scene inside out. But in fact, 30% of people at auctions are there for the first time and the number of ‘first time buyers’ is increasing.
But of course, there are plenty of other ways to buy or invest in property. So here’s a list of pros and cons of buying at auction so you can decide for yourself if it’s the best option for you.
Advantages
Certainty and speed
One of the main benefits of buying property at auction is the speed at which the whole process can be completed.
Whereas buying through estate agents can take months, an auction purchase can be completed in just a few weeks. Ultimately, if you’re the highest bidder when the hammer falls, you have exchanged contracts and have legally purchased the property. There’s no going back.
You’ll have to provide a 10% deposit on the day of the sale, with the remainder payable 20 to 30 days later.
Transparency
Auctions allow you to take advantage of a much more open and transparent buying process.
On auction day you can see the other bidders in the room and have the reassurance that you will only pay one increment higher than the under bidder. No gazumping!
Fairness
There’s no pressure to get your offer in first, as with other property buying methods. When it comes to timing, auctions offer a ‘level playing field’.
And deals don’t fall through due to lengthy delays from other parties or breakdowns in communication.
Straightforward process
It’s a relatively straightforward way to purchase property. You’ll need to bring just a few things on the day if you intend to bid. These are:
- ID such as driving licence or passport and proof of address
- Details of your solicitor
- Acceptable means of paying the deposit, including cheque, debit card, banker’s draft
Greater choice of properties
There’s also usually a wider range of properties on offer at auction. Many sellers do not even consider using more conventional methods of sale. Allsop alone holds 13 auctions a year covering all residential and commercial sectors, with prices ranging from £500 to £10m.
It’s possible to find some real gems going under the hammer.
You’ll find information on all properties in the auction catalogue, which is made available in print and online around 3 weeks before the day itself.
Choice of ways to bid
If you can’t be at the auction in person, once registered, there are several ways to bid remotely:
- By proxy – The auctioneer will place bids on a your behalf up to your specified limit
- By telephone – The auctioneer will call you and you will bid live over the phone
- Online – Bid live from your PC or tablet
Disadvantages
As an auctioneer who loves their job, it pains me to talk about the disadvantages of auctions. But as my colleagues in Allsop’s commercial and residential investment teams always remind me, there are other ways to invest in property, so here are some factors to consider.
Less time for surveyors and solicitors
Although the speed with which you can buy a property at auction is a big attraction, here are a few things to bear in mind.
There is a relatively short window of time to arrange a survey and for your solicitor to check the legal pack of properties you’re interested in. This is because you only have the time between the catalogue being published and the auction taking place – usually 3 weeks – placing pressure on due diligence.
Being ready with your financials
You’ll also have to make sure your financial arrangements are in order before the auction so that you can pay the 10% deposit there and then, and the remainder shortly after.
This can all be done in these time frames but you need to plan ahead and be organised.
It’s easy to go over budget
Set yourself a limit on what you can afford to pay, as it’s easy to get carried away on the day.
It’s important to remember that the guide prices quoted are just that. They are an indication of the Seller’s lowest expectations, not an estimate of the likely sale price.
Remember, once the hammer falls there is no going back!
Richard Adamson
Partner & Auctioneer
Visit our auction site at www.allsop.co.uk/our-services/auction/ to view our available properties.
