Property auctions

Buying a property at auction, as opposed to buying through an estate agent or privately, has both advantages and disadvantages. Whilst many property purchases can drag on for months, an auction sale can be very quick. Although this is ideal in many ways, you have to move fast and arrange things like finance approval and all your enquiries in advance of the auction. It is also likely that you will have more restricted access to the property for viewing and surveying than with most property transactions.

Bear in mind that any time and monies spent, such as surveying fees, will be lost if you are not the highest bidder for the property, which is of course increasingly likely the more interest the property attracts prior to the auction.

However, auctions avoid the possibility of gazumping, where you lose the property because another buyer offers a higher price. At an auction, you know that when the hammer falls you own the property and have an unalterable price to pay.

Property auctions are often a good source of bargains. For example, there are often properties included where the seller is more interested in a quick sale than the highest possible price, and there are usually repossessed property auction opportunities too.

A low auction price may be because the property is owned by an organisation such as a company, charity, housing association or local authority and being sold off in a batch of properties for being surplus to requirements or simply in need of modernisation or repair.

Auctions often yield unusual properties that do not usually find their way to conventional high street estate agents, such as former pubs, banks and churches that could be converted to residential use.

It is important to find out as much as possible about the condition of the building and reason for a seemingly low guide price, if there is one, especially as the auction catalogue details of properties are usually brief. Maybe there is subsidence or fire damage or a sitting tenant, for example?

Properties regularly greatly exceed the guide price and often a low guide price is stated to stimulate interest from potential bidders. Prior to the auction it is important to set a maximum amount you are prepared to bid and stick to it as it is easy to get carried away in the auction room and in the heat of the moment bid more than the property is worth.

If your bid is accepted you are required to pay an immediate deposit, which is likely to be 10 per cent of the hammer price. You are usually given 28 days to complete, so ensure that you or your lender will be able to comply with this. If you bid successfully, arrange buildings insurance from the date of the auction.

To ascertain the dates and locations of upcoming auctions there are a number of property auction sites detailing property auction news - including ones for auctions of property abroad, such as French and Spanish property auctions.

By Ben West