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Expert advice on buying property at auction

Tuesday 19th March 2013

Choosing to buy or sell property at auction is becoming a popular way to transact in property in the UK. But if you are unsure about how auctions work, Chris Hope at Fine & Country Swansea offers advice for both sellers and buyers.

There are a few differences when choosing to auction your property over the traditional method. The way the house is marketed is usually intense for six weeks before the auction date. It would be advertised in newspapers weekly, as opposed to fortnightly or monthly when being sold through an estate agency as private treaty. This is done to spread awareness across the local media and drum up as many potential investors to the auction event.

Owner occupied property in auctions are a rarity as approximately 90% of properties that are being sold are already vacant, according to Chris. This mainly is due a deceased estate sale or if the owners have already found and moved into their dream home, but need to make the accelerated sale on their previous house.

The main advantage of using auctions to sell a property is the quick turnaround of exchanges/completion. This is usually 6-8 weeks, in comparison to what could take up to 3-4 months when traditionally sold. The disadvantage of auctioning is the public matter if the property fails to sell as some buyers may take advantage and makes lower bids at a later date.

Chris Hope says: “Six auctions a year usually work well as there is enough time to market on average 15-25 properties per auction. It is important that the properties are varied in size, price and area, as well as a mixture of residential, commercial and land, in order to bring in 150-200 people to the event.”

It is a common belief that the majority of buyers at auctions are property developers or experienced buyers looking to invest in a second or third home. Chris Hope has seen a variety of different types of people at auctions, including first time buyers looking to get on the property ladder, adding that “the first time buyers are likely to bid higher for a property they really want, with the help of mum and dad, as they are not looking to buy a house for profit, they are looking for a home”.

The preparation for auctioning houses is instant as a contract is drawn up by the seller’s solicitors from day one, meaning information of the property is available immediately. If an offer and the circumstances are right, the property can be sold before the auction, yet the majority of sales are agreed on the day or 48 hours after the event. If a sale is made on the day, this is usually because the buyers are prepared and sure of the property they want to buy and how much they are willing to spend.

One very important matter is protection for the seller; this is covered by setting a ‘confidential realistic reserve’ with the auctioneer, ensuring the property isn’t sold without the client’s approval. All lots are offered for sale with a ‘guide price’, usually quoting ‘Offers over’ or a ‘Price range’

Hope confirms that the greatest interest in most auction markets is for a property in need of refurbishment.

One final piece of advice that Chris Hope offers is that “as long as the sellers listen to the agent’s researched advice, the house will sell”.

              

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