Sharp Increase in Repossessed Homes at Auction

With home repossessions on the increase and the state of the UK economy, there has been a sharp increase in the number of repossessed homes sold at property auctions. Properties are being snapped up way below the market price, with some auctioneers claiming to offer repossession properties up to 40% below the normal selling price.

Leading UK property auctioneers, Allsop claim there is a notable increase in the number of properties being auctioned. Allsop state that the number of properties offered at auction has increased in 2008 whilst the overall price has reduced dramatically, a sign that sellers are looking for quick sales.

Allsop state that around 80% of auctioned properties in 2008 were repossession properties. This large figure has since fallen. This fall is mainly due to government action taken on mortgage lenders to reduce the level of repossession and look for ways to avoid repossession. However, Allsop expect the figures to increase again and more homes to be repossessed over 2009.

Allsop also predict that the number of repossessed homes will not fall for some time and the main source for these repossession houses will be the property auctions. They predict this year will be quiet for the retail property sector but cash buyers will always be looking to pick up bargain repossessed homes.

Allsop suggest that poeple often go to auctions to buy cheap properties and they often leave after finding exactly the repossessed home they were looking for at a bargain price.

Why Auctions Are A Good Place To Buy Repossessed Homes

In the UK, auctions are an excellent place to buy repossessed homes. As soon as the hammer falls the purchase becomes legally binding and an immediate payment of 10% will be required to be paid to the seller’s solicitors. Mortgage companies want to recover losses after home repossession so auctions become an excellent way to sell a property quickly and recover their losses.

For a buyer of a repossessed home, a property auction can be one of the best ways of purchasing a repossession property at a price way below market value. It must also be made clear that the buyer cannot renegotiate a price after the auction is over. Often inexperienced buyers commit to paying over the odds and only find out after a valuation or worse still, a poor survey illustrates some serious problems with the property.

All auction experts advise carrying out full research into a property. They also advise having a maximum bid in your mind on repossession properties and this bid should not be exceeded. A property auction can also be a smooth way of making a purchase, a typical property auction will have 6 or 7 weeks of marketing prior to the event and completion within 4 weeks after the auction. This reduces the chances of delays due to issues of finance, answers to complicated legal enquiries or any other slowdowns. Delays are often common in normal property deals but here properties can be sold and bought in a short space of time.

Repossession auctions can often be extremely competitive and prices often rise over the guide price, so its important not to get carried away in bidding. Experienced auctioneers advise looking out for quieter auctions, if no bids are made on a property it is possible to approach the auctioneers at the end and make a low bid which can be accepted.

Buying Repossessed Homes At Auction

Why Should I Buy At Property Auction?
There are numerous reasons for buying at property repossession auctions. All sellers at auction are motivated to sell and want to sell quickly. This often means that they are willing to sell their property at a low price. Often the residential properties will renovation work carrying out which means there is an opportunity for the buyer to make some money and also increase the value of their property. Also once the hammer falls at a property auction there is no chance of going back on a deal so there is a certainty of purchase.

Are there fewer costs in buying through auction or buying through an agent?
In both cases the fees tend to be similar, there will be legal fees and surveyors fees to payas well as any fees to pay in order to arrange finance. When buying at auction you will need to pay an administration fee to the auctioneers which typically falls between £175 and £300 plus VAT.

What type of houses are sold at auction?
The type of properties sold at auction are repossessed properties which have been repossessed by the bank or mortgage company. As a result the properties may be unmodernised or in need of work. These properties are often different to houses sold at normal estate agents as they may not be immediately ready to move into.

What are the risks of buying at auction?
The risks of buying at auction are similar to those of buying through estate agents. It is important to make sure that u have done all of your preparatory work on the repossessed property such as legal searches, checking the title and surveying the property to make sure there are no defects. The important thing to remember is that once the auction is over the deal must be followed through and you are not able to go back to the seller afterwards should any problem arise. There are no guarantees on the purchase and you must buy it as it is.

How do I find a bargain at auction?
The key to finding bargain repossessed homes at auction is to have the maximum number of options available to you. You should search auction sites on the internet and contact auction houses directly. Bargains are often properties which are not so popular, so looking for a property with defects or one which needs work can be a great option. However, its important to have the know how or ability to deal with defects so that it turns out to be a bargain and not an expensive bargain! When buying at auction, many buyers often leave with ownership of their property at a price much lower than what they were prepared to pay and in case this automatically becomes a bargain.

How can I identify repossessed homes at auction?
There are several things to look out for when identifying a repossessed home at an auction. Check the auctioneers catalogue. In some cases it will say “by order of the mortgagees”, in other cases it may actually say who is selling the repossession property for example a bank, so the catalogue will say “by order of HSBC”. In other times it will say “by order of the receiver”. These are all ways of picking up a property repossession home at auction. However, not all properties will have thsi information in the catalogue. If you suspect the property is a repossessed home, the easiest thing to do is phone up the seller’s solicitor and ask them who is the seller.