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How to buy a Bargain House at Auction (Part 1)

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  • How to buy a Bargain House at Auction (Part 1)

    Auctions have been an established method of buying and selling houses, property and land for thousands of years originating from the ancient Babylonians. Property auctions still indeed hold much weight in today’s market but before the recent boom of the 90’s and early millennium it was only those in ‘the know’ who could benefit from the bargains to be had at Auction.

    With Property Auctions going ‘mainstream’ in the last 6 or so years with the emergence of such popular auction programmes as ‘Homes under the hammer’ the average home-buyer sought the confidence to throw their bid in at the local auction house previously dominated by investors. With this new mainstream wave and the fact that many people of recent years have gotten carried away with the gold-rush boom, bargains where becoming few and far between. With Auctions becoming commercialised the chances of getting a solid bargain where limited to about 1 in 20 being below true market value.

    Today however and more so tomorrow things have and will continue to change, with auctions making a return to form with regards to the bargains to be found. It’s no secret that some form of a recession is on the horizon, and although difficult to tell how long it will last, one thing is for sure that bargain hunters certainly won’t be short of prospects both In and out the Auction House. With many homeowners struggling to sell, properties going stale on the open market, many people will turn to auctions to offload their property, and with the overall confidence low due to the absence of a rising market only the serious buyers are left standing. Those who are willing to hitch their bets and know that they will not be bailed out by the immediate rising market. Now that the auction days are back below is a summary of some auction basics

    Auction Basics

    The main advantage of buying at auction is that you will know on the day of auction whether the property is yours and exchange should take place within 28 days. The seller will decide on the property reserve price and the auctioneer will then set a guide price which you will find to be a little higher than the reserve price. The reserve price will not be disclosed at the auction. If this reserve price is not met then the property will be withdrawn, you will then have the opportunity to approach the auctioneer and negotiate a deal on the property after the auction. A 10% deposit will be required to be put down immediately on the day therefore it is imperative to get your finances in order prior to the big day.

    Who sells at Auction?

    In a slowing market you can expect allsorts of properties that will not shift on the open market simply for the fact that there is a lack of buyers. Generally however you should expect to find properties with unusual circumstances such as short leases, derelict, tenanted etc. Such organisations as Local Authority, Mortgage companies can also be found selling repossessed properties. It is important to note who the seller is as well as the details of the property.

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