With average property prices in the UK increasing by 5.6% since last year, investors are increasingly seeking ways to find buy-to-let property for sale – at a price that suits.
One of the best ways to discover a bargain is to attend property auctions (UK). Auctions give buyers the opportunity to purchase a decent property at an attractive price, ensuring good return on investment. However, property auctions in the UK are often fraught with uncertainty, and there are pitfalls that investors need to be aware of.
Common Risks of Property Auctions UK
1) Getting ‘carried away’. Auctions can get quite exciting – particularly with several investors bidding on the same property. If you become involved in a ‘bidding war’, it’s difficult to maintain perspective; and the desire to win the auction at a sensible price turns into winning the auction by any means necessary. It’s a common pitfall, and causes many investors to spend more than they originally intended to.
2) Lack of options. Attending a local property auction is a good way to find property in a specific area. However, it’s certainly not the only way. Auctions take place across the country, and are not limited by geography – sometimes London flats are sold at Edinburgh auctions! When exploring property investment opportunities, it’s vital to investigate all options – not just the options closest to home.
3) Not obtaining a survey. In a bid to save money, some people choose to skip the survey when purchasing a property at auction. This is a risky strategy. If the property is in good condition, then the risk pays off. However, if the property has problems, it could cost substantially more in the long-run.
4) Checking finances. When bidding at auction, you automatically enter into a legally binding agreement – and if you win the auction, you’re obligated to complete the transaction. Failure to do so can result in significant penalties – as investors have discovered in the past when unable to secure a mortgage against their purchase!
5) Suitable for buy-to-let? When looking at buy-to-let property for sale, it’s vital to keep suitability in mind. Certain properties may have kerb appeal, but might not be appropriate for tenants. Before attending auction, think about your target market, and what types of property are likely to appeal to them. Even better – do research beforehand, and find out what properties in the area are producing a good rental yield. Otherwise, you run the risk of purchasing a buy-to-let you can’t source tenants for.
Other Things to be Aware of at Auction
When attending an auction, you’ll need to know the following:
• Solicitor’s details. You’ll need to bring the details of the solicitor who will be acting for you throughout the house purchase.
• 10% deposit. If your bid is successful, you’ll need to pay a deposit upfront. This is normally 10% of the agreed sale price, or a minimum of £2,000 if the property costs less than £20,000.
• Identification. You’ll need to bring ID in order to take part in the auction.
Support Buying at Auction – Property Seminars and More
Seeking investment properties for sale at auction is a shrewd idea, and can greatly improve your overall returns if you’re buying to let. However, it’s important to note, as David Dalby of the Royal Institute of Chartered Surveyors so succinctly states: “Auctions are (also) a good way to sell a problem… so it’s essential to do your homework.”
The Buy2Let Shop offers a variety of property auction services to help ensure you get a great deal, not a disastrous investment. We’ve got relationships with auction houses across the UK, and have listings for every lot, in every auction. We’ll help match your criteria to relevant properties, and we even offer helpful property seminars to ensure you achieve the best results possible. To find out more, simply visit our site.