Property prices are continuing to rise in the UK. The most recent Land Registry figures stated that average house prices rose by 7.1% in one year (to end of January 2016) – bringing the average property to £191,892. In London, property prices rose by 13.9% during the same period.
As a result, investors are increasingly turning to property auctions in a bid to find a bargain. Unlike houses in estate agency windows, auction properties frequently offer the opportunity to purchase at significantly lower prices – particularly homes that require significant improvement, or repossessions.
The Definition of a Repossession
Quite simply, a repossession is the taking back of a property by a lender or seller from a buyer or borrower – if they’re unable to meet the agreed payments. There are thousands of repossessed properties on the market throughout the year (in 2014, there were 21,000), and this presents real property investment opportunities.
Here’s some of the advantages of purchasing a repossessed house.
–Quick sale. Repossessions are often sold by banks or developers who are looking to sell quickly, as they’re losing money whilst the property remains empty. Generally speaking, there’s no chain involved either, which speeds up the purchase process significantly.
–Reduced price. On average, repossessed houses tend to go for 10% – 30% less than properties on the general market. In real terms, this means you could buy a property worth £150,000 for just £105,000 to £135,000 at a house auction.
–Diverse options available. Not all repossessed homes require significant structural and cosmetic work to bring them to saleable standard. It’s not uncommon to see new-builds come to auction too, though these tend to be less of a bargain than properties in a distressed state.
Buying a House at Auction: Repossession Guide
There are a few things to be aware of when you purchase a repossessed property at auction. These include:
–Serious structural repair. If you spot an incredibly cheap property at auction which looks like it needs repair, it’s important to inspect it thoroughly, and obtain quotes to find out exactly how much it will cost to improve it. Don’t fall into the trap of thinking that, just because it’s incredibly cheap, that you’ll definitely make a profit – if it requires thousands to fix it, this might make it more expensive in the long-run!
–Risk of gazumping. When repossessed houses are sold at auction, sellers often leave them on the market, which means you might find yourself outbid by another investor. As a result, it’s a good idea to complete as soon as possible.
–Check what’s included. Some repossessed properties will come with all fixtures and fittings included. Other sellers may remove these as soon as the sale is complete. Make sure you know exactly what’s included before placing a bid.
Property Auctions UK – The Buy2Let Shop
If you’re new to buying a house at auction and you’d like expert help, talk to The Buy2Let Shop. In addition to having a range of properties on our books that aren’t available on the general market, we also offer assistance with buying a house at auction, and host regular property seminars in London to help you to gain insight into the market.
To find out more, simply visit The Buy2Let Shop website today.