The kind of property you buy at auction is usually unique.
It’s not often in great condition. But this is precisely why most investors see it as a great opportunity.
Read on to find out how to ensure an auction property is safe to buy in the blog below.
What is an auction property sale?
Property auctions sell houses (and other types of property) via open bidding, where the highest bidder wins.
There are a few hundred in the UK. Most work by setting guide prices on auction properties, arranging viewings, and requiring 10% deposits from winning bidders.
Condition of auction properties
Auction property is often in bad condition in some way. This might be because of:
- Structural problems
- A short lease
- Disrepair due to the problem tenants
- House pest problems (ranging from Japanese knotweed to insect infestations)
- Squatters.
And more.
You can get a great deal at auction houses. But you often can’t use a mortgage to complete the purchase. So, many auction property buyers use cash.
How many properties get sold at auction?
Experts estimate that roughly 20,000 homes are sold at auction in the UK every year. This equals around 2.2% of all property sales in the country.
Is it safe to buy an auction property?
Yes, it’s safe to buy an auction property. As long as you do your research on the company involved.
Like with all industries, not all businesses are entirely trustworthy. Look into anyone that you consider buying with.
As a general rule, buying an auction property is safe. It’s done 20,000 times across the UK every year. And many buyers are pleased with the deals.
Signs that an auction company is trustworthy
Professional website
All auction houses should have a professional-looking website.
When carrying out such high-ticket transactions, they’ll have the funds to pay for something like this.
Especially since it allows potential bidders to view items online.
In-person presence
You should be able to meet an in-person representative of the auction house.
They will often have premises that you visit, which is where auctions occur.
Remember that some auction houses are online bidding only, although this is less common.
Independent reviews
Online reviews are the best way to ensure a company is worth using.
These should be from lots of independent people over an extended period.
You should be suspicious if all the reviews are very similar and uniformly positive.
Registered with relevant organisations
Auction houses in the UK should be registered with the local council. You can contact them to make sure.
You can also count on ‘The National Association of Valuers and Auctioneers’ (NAVA) as an independent regulator.
Speak to them to confirm the validity of any auction company you consider.
Clear terms and conditions
You shouldn’t feel deceived by any auction company you work with. Their terms and conditions should be crystal clear and accessible.
If they sneak in hidden costs, this is also a major warning sign.
Do you get good value for money with an auction property?
It depends on the circumstances. Getting a survey done beforehand allows you to understand the true condition of the house.
You can then make your own judgement on what a ‘fair price’ would be. Independent property experts can give you their opinion on this, too.
