Property auctions are becoming increasingly popular among investors, developers, and even first-time buyers looking for unique opportunities. Yet, for many, the word “auction” still conjures up misconceptions that can deter potential buyers and sellers. From assumptions that auctions are only for distressed properties to fears of an overly risky process, these myths can prevent you from tapping into the potential of auctions. Let’s set the record straight and debunk some of the most common myths about property auctions.
Myth #1: Auctions Are Only for Distressed Properties
One of the most common myths is that auctions only deal with run-down or repossessed properties. While it’s true that auctions may include repossessions or properties in need of refurbishment, they are by no means limited to this category. Auctions often feature a diverse range of properties, including:
- Residential homes ready to move into.
- Commercial buildings ideal for businesses or investments.
- Land plots with planning permission for development.
- Luxury properties that owners wish to sell quickly and efficiently.
The variety ensures that auctions appeal to a wide audience, from first-time buyers looking for a bargain to seasoned investors seeking high-yield opportunities. Auctions are also an attractive route for sellers who value a swift and transparent sales process.
Myth #2: Auctions Are Risky
Another common concern is that buying at auction is inherently risky. However, with the right preparation, the process is straightforward and transparent. Here’s why auctions can actually minimise risk:
- Legal Packs: Every property listed in an auction comes with a legal pack containing essential documents, such as title deeds, leases, and any relevant planning permissions. Buyers can review this pack (with the help of a solicitor if needed) before bidding.
- Guide Prices: While not the final sale price, guide prices provide a clear indication of the property’s value, helping buyers determine their budget.
- Completion Timeline: The auction process is fast but predictable. Once the hammer falls, the sale is legally binding, and completion typically occurs within 28 days. This eliminates the lengthy delays and uncertainties often associated with private treaty sales.
The auction process can be a secure and efficient way to acquire property if you do your due diligence and set a clear budget.
Myth #3: Auctions Are Only for Professional Investors
While it’s true that experienced investors frequently turn to auctions for their property needs, auctions are not exclusive to them. First-time buyers and those new to property investment can benefit greatly from the auction process. Here’s how:
- Transparency: Auctions offer a level playing field where all interested parties can bid openly. There are no backdoor negotiations or hidden surprises.
- Affordability: Properties at auction often have competitive guide prices, making them accessible to more buyers. Additionally, many properties are ideal for refurbishment, allowing buyers to add value.
- Support: Auction houses typically guide newcomers through the process of registering to bid and understanding the legal pack. We will guide you every step of the way.
Myth #4: You Have to Pay in Cash
A common misconception is that auction properties must be purchased outright with cash. While it’s true that you need to pay a deposit (usually 10% of the purchase price) on the day of the auction, the remaining balance is typically due within 28 days. This timeline allows buyers to arrange financing, including mortgages or bridging loans.
If you’re planning to use a mortgage, it’s essential to have a decision in principle and ensure your lender can work within the auction’s timeline. Auction finance specialists can also help secure funding quickly.
Myth #5: Auctions Are Intimidating
For those unfamiliar with the process, auctions can seem daunting. However, they’re much more straightforward than many people think. Here’s what to expect:
- Pre-Auction: Browse the auction lots, visit properties of interest, and review the legal packs. Set a budget and prepare your finances.
- Auction Day: Our auctions are carried out via livestream. Make sure you are registered to bid and place your bids from the comfort of your home.
- Post-Auction: If you’re the highest bidder, you’ll pay a deposit immediately and complete the purchase within the specified timeframe.
We strive to make the process as smooth and accessible as possible. Don’t hesitate to ask questions or seek advice beforehand.
Myth #6: Selling at Auction Means Accepting a Low Price
Sellers sometimes worry that listing their property at auction means settling for less than market value. In reality, auctions can achieve excellent results, often surpassing expectations. Here’s why:
- Competition: Competitive bidding can drive the final sale price above the guide price, especially for properties in high demand.
- Wide Exposure: We market properties to a broad audience, attracting buyers from all over the country.
- Speed: For sellers, the appeal lies in the certainty and speed of the process. Once the hammer falls, the sale is legally binding, avoiding the risk of buyers pulling out.
Myth #7: Auctions Are Only for Local Properties
While auctions often feature properties from the surrounding area, they are not geographically limited. We also list properties nationwide, and online bidding has made it easier than ever to participate from anywhere. This opens upopportunities to explore markets outside your immediate location, potentially finding higher-yield investments or better deals.
Why Auctions Work in Your Favour
Whether you’re buying or selling, property auctions offer numerous advantages. They combine speed, transparency, and competitive pricing with diverse opportunities. By debunking these common myths, we hope to encourage more people to explore auctions as a viable and rewarding option.
Ready to take the plunge? Contact us today to learn more about our upcoming auctions and how we can help you achieve your property goals. Let’s make this your year to unlock new possibilities in the property market!