Would you buy an auction property?

[floridapalmtree]

Thinking of buying at auction because they appear to be cheaper and I can potentially buy without a mortgage.

However, I am dubious at to why some properties are sold at auction. Are there underlying reasons why some properties are sold at auction? Is it just a case of getting a quick sale or are they trying to get rid of it because of a major problem. Can you ask a surveyor to view beforehand? What things should I look out for? I'm not bothered about the property needing work like rewiring/ plumbing just concerned about the unknowns. Any thoughts most appreciated.

It's usually because of both things, ie, they want a quick sale and there are major problems. You will be given the opportunity to view the property before the auction and you could always take a surveyor with you then, thats what I would do.

Think about where an elderly person has lived alone for 95 years and not done any work on the house for 35 years and their next of kin was a very distant relative who was left the house but just wants to get rid quickly.

Properties at auction are selling for a lot more than the guide at the moment, especially those with land. I recently saw one with a guide at £85,000 (complete renovation, couple of acres and Japanese knotweed) in mid Wales sell at £370,000. More than similar completely renovated houses in the area.

A friend sold a barn with a few acres in Devon for four times the guide recently too.

Cheap prices draw people in.

As @ThisIsStartingToBoreMe says, often where there are some problems either structurally or just hasn't been touched for years. This is why they're often bought by property developers or builders etc who have teams of people to sort things out. This is what's happening with a relative of mine who has probate for her mother, house hasn't been touched in at least 25 years. Structurally the shell is sound but needs a lot of work to bring it up to scratch.

I did work with someone who once auctioned their property as they were moving abroad with fairly short notice, so wanted a very quick turnaround that often comes with auction. Actually sold for fairly near to what agents would have recommended as asking price, so it's not always that it'll be snapped up loads cheaper.

You should binge watch some Homes under the hammer. Some horrors pop up on there.

Just placemarking. Would love to hear people's experiences

one up at auction near me normal price for these houses 150k this one up at guide price 120k friends daughter went to look at it needed everything new kitchen, new bathroom, decorating, wiring new flooring , all the way through, garage was almost falling down, even with tradesmen in the family who could do all that for them it would have cost over 20k to get it up to scratch so would have taken it to ceiling price for that part of town and they dont have that sort of money to put up front to get the work done

I did buy an auction property and it has worked out for me. Usually there is something about a house at auction that makes it unmortgageable, how a lot of developers make money isn't necessarily the work they do upgrading the house it's resolving whatever issue that means banks wouldn't lend for it so it can be sold on at a higher price.

Definitely watch Homes Under The Hammer and be aware of the “fees and taxes” that they mention in passing, which can be as much as 20% of hammer price.

Make sure you get the legal pack checked by your solicitor before bidding. I’ve known properties be sold via auction because there is a legal issue that means it would be very hard to sell otherwise.

Many solicitors would charge a fee to check the pack , which would then be discounted from the conveyancing fees should you succeed at the auction.

Also bear in mind that you would only have 28 days to complete after the auction- if you did need a mortgage it is very unlikely that the offer would be in place in time and in any case a property being sold at auction may very well be unmortgageable depending on condition . I have never had a client buy at auction needing a mortgage

A lot of people who buy auction properties are construction bosses. They have construction staff on their payroll already and when the weather is bad and they can't work outdoors or a delivery didn't arrive in time then the boss sends them in to the house they brought at auction to work on that. Therefore, it doesn't cost him anything in labour because he has to pay the men (yes they are always men) anyway. He also has good contacts for cheap materials and can buy in bulk.

If you are able to do your own DIY you might bag a bargain but I wouldn't count on making a profit if I had to pay someone else to do all the work, on top of the price already paid.

I sold my house via the modern method of auction. It had been rented to family for years and needed complete renovation. I'd worked out that taking a lower sale price would be not too much less than taking into account estate agent fees and utility/mortgage payments for 6+ months whilst it was empty, and that was assuming the sale didn't fall through and I'd have to start the process again.
Structurally the house was sound and was mortgageable.

Someone nearly got a bargain - it had a guide price of £130k. If I'd sold it the normal way, the EA would have expected to get £150-160k for it. Probably worth £180-200k when renovated. It stayed at £135k for ages, and the bidding went a bit crazy towards the end and it sold for £165k including the fees the buyer had to pay. From auction to completion it took 8 weeks

So my advice would be to set a max budget which takes into account your fees, and don't get caught up in the drama! The modern method of auction gives you longer to go through the process- my buyer got a mortgage and survey, but you have to prove you have funds before you can bid. I think if you are willing to do the work and stay in the house long term, it can be worth it. I don't think non-construction people can make any profit flipping houses in the current market

I've bought a couple at auction. They usually are either distress sale or probate or one that needs a lot of work. You need to read the legal pack carefully- sometimes you have to pay the sellers fees, sometimes completion is 14 days, etc.
The great thing is it's quick, the downside is you may get bidding fever and get carried away. Do your research, know the extra expenses involved, set your limit and stick to it.