Properties to Expect at an Auction

March 14, 2010 | Posted by admin

     If you want to purchase a property quickly and at a bargain price, then nothing beats an auction. Indeed, a property auction is a great place to get your foot up on the first step of the property investment ladder. You can score a property investment at a price well below market value and the best part is, the transaction is virtually as easy as the fall of a hammer. Act quickly, for that dream property might just be waiting for you at an auction.

     Generally, the process of an auction sale is fast and easy. You can buy a property by bidding the most at a property auction and as long as your bid is equal to or above the reserve price. Once the auctioneer’s hammer falls, the property is yours and you are expected to fork over 10% of the total purchase price as deposit on auction day. You have twenty eight days thereafter to complete the total property purchase price. Therefore, buying a property at an auction takes only a month – pretty convenient in comparison to going through the perceived hassle of using an estate agent.

     Why are auctions so popular? Most of the time, the lure of auctions is that most properties are sold at a very attractive and reasonable price. You may then ask what makes it possible for these properties to be sold below market value. Most of the time, the situation of the sellers is the reason for their very cheap price. Here are the basic types of properties to expect when you go to an auction house:

     Repossessed properties

     Repossessions are properties of banks, building societies and lending institutions that they have obtained after the previous property owner defaulted on his mortgage. Since these financial institutions are not in the business of property investment, they want to liquidate their property assets to recoup their cash right away. Moreover, these institutions are required by law to get the best possible price for their repossessed property. An auction is the best way to meet the requirements of the law and getting the property off their hands is the fastest and easiest way. Therefore, an auction is the best place to find a repossessed home or another such property for a very cheap price. You would be surprised at the bargains you can find.

     Derelict properties

     A derelict property is a property in a run-down condition. It would most definitely need an overhaul or an extensive renovating job in order to make it livable or salable. Therefore, many derelict properties are put up for sale at an auction at a very low price. If you are an investor with the patience, time and resources to undertake a major renovation and repair on a property, then a derelict property just might be right for you. However, before you fork over your money at a property left behind in poor condition, factor in the cost of repairs to determine if you can still resell it at a competitive price. Remember, renovation can be quite expensive. Be sure that you are ready and willing to undertake such risk with a derelict property.

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