Under The Hammer: Purchase Below Market Value
Property auctions in the UK are held in a number of towns and city locations, each auction company holding two or three auctions per month and advertising them extensively beforehand in the local press and on the many property auction websites now available. The advantage of purchasing a property by auction is that the property is often sold well below market value. The properties sold are quite often ripe for property developing, providing the buyer with the opportunity to get onto the property ladder or increase their property portfolio, often making substantial profits when they later come to sell the property they bought at auction. Estimates suggest that around 30,000 properties are auctioned each year in the UK and, at the end of each auction; it is unusual for a property not to be sold.
Properties which are most often sold at auctions include dwellings which have been repossessed by lenders from mortgagees who have failed to keep up their payments. Other properties come to auction due to a deceased resident’s estate having to be wound up. Other properties need extensive renovation or building work done to make them habitable, resulting in an auction being the only way to successfully dispose of a property for sale. Many types of property come onto the auction market, both in the commercial and residential sector, including parcels of land and tracts of farmland. Flats, freehold dwellings, leasehold properties, fixed site caravans, office blocks, farms; individual auctions are often dedicated to specific property criteria, although some are mixed auctions.
There are various advantages to buying property in an auction in the UK, apart from a competitive purchase price. Property auctions in the UK provide an opportunity for all interested parties to bid fairly in an open market. Where a bid is successful the vendor is unable to withdraw the property from market and the purchaser can be confident their successful bid will result in a successful acquisition once legal completion has taken place.
Naturally, if you are purchasing a property at auction it is often not possible to view the potential purchase beforehand, although this is sometimes possible. However, if you manage to obtain a property well below market value this is often a risk well worth taking just to obtain a desirable property.
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