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Auctions

Auctions

When we receive enquiries by keen sellers we often come across the question of feasibility of selling at auctions. So we thought we’d put together a basic run through of what to expect from property auctions.

In many property auctions you will find what’s called the “Buyer’s Premium”.  Which is an cost added to the price the auctioneer sells the property for. It is vitally important you know how much this fee  actually is. It is usually a fixed amount which is then added to the price the property. Some auctions may charge a percentage rather than fixed fee – again make sure you know.

 

Auctions

If you are thinking of selling your property at auctions you must pay close attention to the amount the auction house charges as a buyer’s premium. Auctions will by law ,disclose their buyer’s premium in their property catalogue and in their terms of business. In contrast some auction houses do not operate with a buyers premium and instead will make their margin on sellers fees – in which case you need to know this to work out what you will net from your sale.

Are there bargains to be had?

Of course sometimes you can grab a bargain, but you must do your homework first. Many properties at auctions have failed to sell on the open market and are there for a reason. Some properties will be unmortgageable, for example, non-standard construction properties where very few lenders if any will lend on these type of properties. You must make sure you have your finance in place before you bid or you risk losing your deposit.

Be careful with properties that might be subject to adverse planning in the area or where the property has serious defects like dampness, subsidences, Japanese Knotweed or contamination issues. Also check the neighbourhood, particularly close neighbours. Properties offering high yields can be very misleading as there is no guarantee tenants will continue to stay on in the property.

auctions

Auctions

Now that you know how the buyer’s premium works for both buyers and sellers at auctions, go and enjoy your auction experience, but remember to take your time and don’t be tempted to buy a property until you have completed all your due diligence. Properties that are secured at a bargain are normally at a bargain for a reason but you may see an opportunity in a property no-one else has spotted.