What are the pros and cons of buying or selling at auction? Here are some thoughts...
Auctions are for people who don't mind taking a risk, aren't they? They're not for the likes of us who are more used to using an estate agent when buying or selling our one and only home? Well, yes and no.
For a start, if you want to act quickly, then you can't beat an auction. The buyer is usually obliged to stump up a 10% deposit from the moment the hammer falls, and is then committed to completing the deal 28 days later. If you need or want the deal to be done and dusted inside a month, then consider an auction. And the costs if you're selling aren't really that much different to those of an estate agent.
The sort of properties that are often for sale via an auction, can probably be categorised as follows:
Repossessed
Banks and building societies often sell repossessed properties via auction because they are obliged by law to get the 'best possible price'. And where else would you be able to get the best possible price other than by auctioning it to the highest bidder at any given moment?
They'll sometimes market the same repossessed property via an estate agent at the same time - it's a good way of making the estate agent try harder to sell the property because they have a limited time frame in which to do it. And, for buyers, repossessed properties can be cheap. You'd be surprised how many are trashed by their owners once the bank or building society has taken it back!
Derelict
This is the sort of property left by the granny who flatly refused to go into a nursing home even though she was incapable of looking after herself and then suddenly died without leaving a Will. Two years later, the house is still empty, her children are fed up with waiting for their share of the estate and just want to get shot of it as quickly as possible. For people looking for a renovation project, this type of property is a perfect target. Unfortunately, the competition is fierce - Sarah Beeny has a lot to answer for!
Difficult
Some properties have such a niche market that they don't appeal to the general public and require a buyer who is prepared to take a serious risk. It might involve taking on a franchised business, for example, or, at its most basic, it might be a home that is, quite simply, bloody ugly. Unless you really know what you're doing, beware of buying one of these!
Uniquely Special
Some homes are so especially fabulous that it's impossible to calculate how much they might be worth because there is nothing to compare them to. A uniquely special property may even be so unusual that it warrants an auction all to itself. It's this sort of property that could bring in the big bucks if you're selling and, if you're buying, it's the kind where you could get carried away and pay over the odds when you can't really afford it. So, if you're selling, go for it and if you're buying, make sure you absolutely know the limit of your budget before you start bidding!
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