Over the past few years, and certainly since the beginning of 2020, using auctions to buy and sell property has surged in popularity. Certainly during the March 2020 ‘lockdown’ it was the only way to continue to sell and purchase, (although completion was delayed) for many. It continues to grow in favour as a real alternative for many residential buyers and sellers and not just traders and developers, however, many buyers still scour the auction property market looking for ‘bargains’ or as a way to make money.
Unlike using a traditional estate agent, buying at auction allows buyers and sellers to avoid long and drawn out transactions that in over 30% of cases, fall-through at some point. In auctions, once the hammer strikes that’s it. The property is yours (assuming you exceed the reserve price).
Auctions are also the perfect place to find many unique and unusual properties and homes that your estate agent wouldn’t normally have access to, another way of finding that ideal investment opportunity or home.
Whilst I am extremely passionate about the benefits, remember that property auctions aren’t just rainbows and unicorns. There are some downsides and potential roadblocks to making money. As mentioned, once the auction ends, if you are the successful bidder, there is no turning back – you are bound to the seller – and the seller to you, so you need to ensure your funds and in place well in advance.
Second, finding a so called ‘bargain’ or good value at an auction requires a lot of due diligence. If you think you can go and bid on a property via any type of auction without putting in the necessary research and other legwork, then you are going to come up short, and risk being out of pocket financially.
Similarly, it’s totally possible to spend valuable time and money only to come up short in a bidding war, or to have someone swoop in and buy the property before the auction formally starts. But that makes for a more exciting process with more control than for you than a normal estate agency process.