Welcome to Houses for Auction

Buying Houses at Auction

Before buying property at auction, the most important thing to understand is why houses come to be for sale at auction in the first place. The most common reasons for a house finding it’s way under the auctioneer’s hammer are;

• Distressed Sales
• Atypical Properties
• Asset Liquidation
• Raising Capital

Once you understand the motivations of sellers you can understand the reasoning behind the huge discounts they offer. As we will see, not all properties sold at auction represent good value for money, but amongst those properties are some incredible bargains.

Distressed Sales

The most frequent reason for a property to find it’s way to auction is a distressed sale. The sale is ‘distressed’ because the owner has been unable to sell via the more usual channels and is motivated to offload the house in any way they can. To ensure a sale they may be prepared to accept offers below the market value of the property. Beware of properties that have serious defects or are in a state of serious disrepair unless you have factored in the cost of renovations and have obtained all relevant planning permissions.

Atypical Properties

Sometimes a seller goes to auction hoping to attract additional interest in the sale of their property. Auction house advertisements and an attractive asking price can work particularly well where a property is already highly sought after. A bidding frenzy could provide the seller with more profit than they would have expected on an open market.

Liquidation

Asset liquidation often utilises auction sales to dispose of properties owned by companies or individuals who owe money. Their motivation is not to sell for the most cash, but to ensure that enough is raised to repay the debts of their clients. Bank repossessions, company liquidations, and bankruptcy are all examples of liquidations providing auction day bargains.

Raising Capital

Selling large property portfolios at auction can occur when a corporate strategy changes or a housing association disposes of stock. Often located in the same area there may not be sufficient interest from the local housing market to buy en-masse. To dispose of large portfolios can be a costly process, and selling property at massively discounted prices for a quick sale via auction can often be the answer.

Do your research….

The more you know about a property at auction and the reasons for it’s sale, the better. You will have a competitive advantage over other bidders which will help you to make a tidy profit.