Buying a property at auction can be much cheaper than buying conventionally. Its claimed you cans save up to 40% on a property by buying it at an auction.
Mortgage lenders frequently dispose of their repossessed properties for sale, usually at deliberately reduced "reserve" prices to ensure they sell quickly. Local authorities and housing associations use them for similar reasons.
They have a lot of flats/houses on their books and for them it is just a job rather than their home. Often they don't seem to see the value of them highly. In many cases they may not have even seen the property instead relying on estate agents and valuers What these people want more than anything is a fast, no hassle sale. They just want to get rid of them and recoup some money as fast as possible .
Of course there are some downsides to buying property at auctions - though these are not insurmountable.
- You'll need to have got your valuation/survey, conveyancing and mortgage sorted beforehand.
- Even though you've paid for surveys etc there's no guarantee you'll be the successful bidder.
However, if you've got the spare cash the sort of savings possible could make it very worthwhile.
The key is the ability to move fast and hold your nerve - there is much greater uncertainty than buying a home the normal way - until the auctioneer's hammer falls on the highest bid.
The timescale from the announcement - basically when the auction catalogue showing all the "lots" for sale is printed - to the date of the auction is often only three or four weeks.
However it's quite possible to arrange everything within that time if you organise yourself properly.
Basically the process is the same as that outlined in Completing the deal i.e. as if your offer has been accepted and you now have to arrange the actual purchase.
A further benefit of buying at auction is that you can buy your home more quickly because it isn't part of a slow moving and stressful chain.