It is a sad fact of modern life but homes are being repossessed at an alarming rate. This is because, for several years, lenders and borrowers alike have seen a relatively easy time and banks were happy to lend money to people above and beyond what they could really afford. And now we have the situation that means many of the home owners cannot meet the mortgage repayments and houses are being repossessed up and down the country. This does, however, benefit many people who have astutely managed to make, keep or save enough money to go out and buy auction property.
These auctions are where the repossessed homes end up so that the banks can get their money back as swiftly as possible. Thousands of auction properties go under the hammer every year and wise investors can really snap up a bargain. Between ten and forty per cent of the true value of the auction property can be saved when purchasing through this method.
If you are looking for a property that is going cheap, find a run down area. These homes can be refurbished and sold on for a profit, rented out to tenants or used as your own home. If the area is a little derelict, there are sure to be other investors interested in the bargains that can be had and the area itself will soon pick up with the money that investors plough into it.
Property auctions come in four different sizes. There is the single auction property for a house that is in great demand. This may be because it is infamous for one reason or another or because it is an usual property or in an unusual location. Small composite auctions offer between two and five lots with up to five bidders. These auctions are held in pubs, restaurants, hotels or some other similar size venue near to the properties that are being sold.
Medium composite auctions will sell up to one hundred lots, attracting up to 500 people and likely to be held in a hotel or conference centre. The larger property auctions, for the more experienced buyer, will sell over one hundred properties and at least 300 people will attend so competition is high for these two categories.
Auction property is not as easy to find as you would think. There is usually enough business generated through word of mouth without the need for advertising. You can phone auction houses and ask to be put on a mailing list and they will then notify you of the next sale and supply you with a list of lots that are expected to be available.
Most sellers will supply information that will tell you the property location, construction details, tenure, accommodation details, whether refurbishment is required, viewing and solicitor details. This is not enough information alone and surveys need to be carried out on a property you are serious about buying. You also need to have funds or a readily agreed mortgage available on the day of the auction.
It is important to gather as much information as possible before you attend a property auction on how they work, what to expect and what to do and what not to do. This information can easily be found on the internet.
Reverse property auctions are being tried in some areas and these are a fantastic way to snap up a bargain, particularly for first time buyers unable to secure other accommodation. The scheme auctions properties via an internet bidding site but rather than going to the highest bidder, the auction property is given to the person that puts in the lowest unique bid.
This scheme only allows bids up to five per cent of the property's market value so, in theory, a property that was worth 180,000 pounds could sell for anything between 1 pounds and 9,000. pounds Bidders are charged 3 pounds per bid via the internet or SMS and this is how the total funds for the property are accumulated.
Property expert Catherine Harvey looks at how to buy auction property and reap its associated benefits.