11 Things You Need to Know About Auctions
Whether you're a novice just starting out or have been buying properties at auction for years, there are some essentials you need to know before stepping into the auction room. 1. Buyers...
Whether you're a novice just starting out or have been buying properties at auction for years, there are some essentials you need to know before stepping into the auction room.
1. Buyers will generally be appropriate to the specific properties on offer. So, properties for refurbishment will be acquired by builders or individuals for refurbishment with plans to resell or rent. Plots will usually be bought by developers or individuals for self-build. Commercial and mixed use will be bought by occupiers or investors, and tenanted property or HMOs with attractive yields will be sought by medium- to long-term investors. Repolist has a wide range of auction properties on offer.
2. The proportion of private buyers has grown significantly over the years, attracted by the potentail profit opportunities available through auction purchase and refurbishment. First time investors have also grown, as have first time buyers purchasing for personal occupation.
3. The choice of auction room is determined by the property and currently around 80% of all auction lots are sold through auction rooms in the region they are being offered, rather than through a London sale room. Frequently the prices achieved by London auctioneers for regional properties is below that delivered through local auction rooms. On this basis, buyers will usually pay less for a property in Manchester or Leeds that is being auctioned in London than through a local auction room.
4. Hold off from bidding until other interest is evident in the room as the property could get withdrawn and a below reserve offer could secure it post-auction. Bid wisely rather than wildly and communicate your intent to the auctioneer. Set yourself a maximum amount you're willing to bid ahead of the auction starting - this will help keep you focussed.
5. There is a relationship between the guide price and the reserve price – if the lot is offered with a guide price range, the reserve needs to sit within that, if it is offered with a single figure guide the reserve can be no more than 10% ahead of the guide. Properties where there is only one interested bidder will sell at reserve, when many people want the property it will often achieve a figure well ahead of guide/reserve. To find a large selection of auctions properties.
6. If you define developers as anyone purchasing to modify/improve/develop (the widest definition of investors is a purchaser that retains the property for occupation/use by others) then the percentage of auction buyers that fit into this bracket will most likely be over 75%.
7. The norm is that 10% of the purchase price is payable on the fall of the gavel and is collected in the room upon signing contract papers. The balance of 90% is normally due 28 days later, although some completion periods differ and many repossessions are now offered with a 14 day completion period.
8. Best things about buying at auction? The speed of purchase, certainty, chance of getting a bargain and the level playing field and fairness of the system.
9. Worse things about buying at auction? The speed of the process can cause difficulties – buyers need to be focussed and complete their due diligence before auction day. Getting professional advisors to work with the required speed can also be challenging.
10. Auctions are the best way to buy the property you want in a fair and speedy fashion. The system overcomes the long-winded uncertain and frustrating battle frequently experienced in private treaty transactions and the chance of fall-through. To find out more about buying properties at auction.
11. Anything can be put up for auction: stretches of riverbank, a railway bridge over a river on a disused line, a signal box and underground bunkers. That's what makes them so intersting for potential developers.