Property Auctions

Property Auctions in London

Growing numbers of Britons are heading to the auction house, rather than the local estate agents, in search of their next property, with many London auctions offering them the chance to secure an excellent deal.

In general, auction houses release their lists and reserve prices up to a fortnight before the event itself, allowing buyers to check out the market rates and get their finances in order.

Often, auctioneers are selling properties on behalf of housing associations and local authorities, although recently growing numbers of homes are being put up for auction due to their previous owners having fallen so far behind on their mortgages that they had them repossessed.

And while this means there are often plenty of good deals on offer, a majority of those attending auctions tend to be experienced buyers who know the risks as well as the benefits.

Things to look out for at Property Auctions

In general, property auctions offer the opportunity to land a bargain home in London.

However, while there are many benefits to buying a home at auction, not least the prospect of landing a bargain, buyers need to go into them with their eyes wide open and aware of all possible pitfalls.

One of the biggest problems is finding funding for a purchase. Banks and other lenders are often wary of lending large mortgages on properties which come up at auction, not least because they are often subject to swift and severe devaluations.

For example, a buyer could place a deposit down on a property at auction having agreed a mortgage in principle with a lender, only for the bank or building society to devalue the home and pull out, potentially at the very last minute, leaving prospective buyers with the stressful task of finding new funding, often in the shape of a commercial loan.

To cover this, many buyers turn to bridging loans, which, though expensive, offer the necessary finance until longer-term funding can be secured.

As such, it's always best to secure a definite mortgage offer before heading to an auction, while buyers should also be aware that the auction house itself is likely to charge an administration fee, though these are usually in the hundred, rather than thousands, of pounds.

One other financial factor for buyers, and particularly those looking into a buy-to-let investment or whose finances are likely to be stretched to the limit with a home purchase, is that a majority of lenders will not remortgage a property up to a year after purchase.

Aside from this, prospective buyers may also want to take into account the stress caused by the uncertainty of this type of home purchase and whether this outweighs any potential cash saving.

Who does property auctions?

The number of companies offering property auctions is growing by the month, particularly in the London market, which is generally busier than the rest of the country.

However, the biggest names in this field are the likes of Countrywide, Allsop, Barnard Marcus, and Sutton Kersh Binstock.

To make life easier for buyers, auction houses are increasingly forging relationships with companies that provide bridging loans. Savills, for example, now works with Auction Finance while Countrywide lends directly to its customers.

When are property auctions in London?

With so many auction houses opening up, property auctions in London take place most weeks, though most houses tend to restrict their larger events to once a fortnight or once a month, allowing customers enough time to do their research and get money matters sorted.

How to take part in an auction

Again, property auctions are largely the preserve of experienced home buyers, developers and investors.

However, signing up to one couldn't be easier, with most auction houses allowing prospective customers to express an interest or sign up online or in their office, while most will also allow the merely curious to attend an event before they make a commitment.

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