Buying a house at auction

gazfocus

Any tips for buying a house at auction? 

I have started to look at houses that need some form of renovation and all the ones that seem to be priced realistically are sold either via 'traditional online auction' or 'modern method of auction'. Any houses that are sold by regular estate agents don't seem to take the condition in to account with their pricing.

As an example, a house all done and dusted in the area I'm looking might be £125k....the same size house needing replastering, decorating, new kitchen (think barely a kitchen in the house), new bathroom, etc, still being listed at £125k with estate agents, whereas the same size house at an auction has a guide price of £80k.

Is it worth trying to offer low on the houses with estate agents rather than trying to get one via an auction?

theoretica

Don't just look at the guide price at an auction - follow a few auctions and look at what the properties actually sell for.  Is that auctioneer one who entices buyers in with a low guide price and most properties sell for more?

rigolith

You also need to do your homework. People have discovered that the house they bought had charges against it that they were then liable for, as an example.

gazfocus

rigolith said:

You also need to do your homework. People have discovered that the house they bought had charges against it that they were then liable for, as an example.

I would have thought that would all be dealt with by the solicitors still, as there would still be a conveyancing process?

Mutton_Geoff

The reason you don't see them listed with regular agents is the double bubble rule.

theoretica

gazfocus said:

rigolith said:

You also need to do your homework. People have discovered that the house they bought had charges against it that they were then liable for, as an example.

I would have thought that would all be dealt with by the solicitors still, as there would still be a conveyancing process?

Yes and no - solicitors can check everything out, but they need to do so before you commit to buy.  Which means before you bid at auction.  And it can get expensive getting properties checked out and then being outbid.

gazfocus

Mutton_Geoff said:

The reason you don't see them listed with regular agents is the double bubble rule.

What's the double bubble rule?

user1977

gazfocus said:

rigolith said:

You also need to do your homework. People have discovered that the house they bought had charges against it that they were then liable for, as an example.

I would have thought that would all be dealt with by the solicitors still, as there would still be a conveyancing process?

Yes, if you have taken the trouble (and expense) to get your solicitor to check the legal pack before you bid. But some buyers are more gullible.

I would generally expect properties in an auction to have something significantly "wrong" with them, not just needing fairly superficial renovation. Though sometimes properties are put in auction just because they're in quite slow-moving markets. Tread carefully anyway, there could be something either physically or legally up with it which isn't obvious.

eddddy

gazfocus said:

As an example, a house all done and dusted in the area I'm looking might be £125k....the same size house needing replastering, decorating, new kitchen (think barely a kitchen in the house), new bathroom, etc, still being listed at £125k with estate agents, whereas the same size house at an auction has a guide price of £80k.

It seems unlikely that the situation is that simple.

If you put yourself in the seller's shoes, why would they sell a property for £80k at auction, if it would sell for £125k through an estate agent?

People don't generally 'throw away' £45k for no reason.

If the house in question sells at auction for £80k, typically, there will be some kind of "problem" that is reducing the property's value by £45k.

Simonon77

Houses very rarely sell at guide price at auctions. Unless you are a property developer already, or a builder with a team of people working for you, it will end up costing you more than buying traditionally by the time you are done.

Avoid modern method of auction like the plague, it is a scam

Mutton_Geoff

gazfocus said:

Mutton_Geoff said:

The reason you don't see them listed with regular agents is the double bubble rule.

What's the double bubble rule?

When an agent takes on a property that needs real work doing on it, they will contact their list of known builders as once renovated, the house will come back to them for sale again. Two lots of commission instead of just one if they sold to you. Often these projects don't even get listed on the portals.