by Stuart-Collar Brown, My Auction
When done correctly, property investment can be extremely lucrative. Whether a profitable choice of career, or even side hustle, property investment still offers more gain than money in the bank and selling and buying via an online auction is a fantastic way to maximise the potential of a property investment.
From both a seller and buyer point of view, a sale via auction provides a level of security and confidence that a private treaty sale cannot. Private treaty sales are renowned for their high fall-through rates which often leave both the seller and buyer out of pocket as well as back to square one in terms of the property sale, with this sometimes-happening multiple times consecutively. For a property investor, the impact this can have on your cash flow and business plans can be devastating and is something that everyone wants to avoid whenever possible. For investors who are looking for a certain sale figure by a certain date, and don’t want to go through the hassle of sales falling through, auction provides the ideal solution.
Property auctions offer a much lower fall-through rate of less than 1% so it’s no surprise that more and more people, particularly property investors, are opting to buy and sell this way. In fact, the number of properties sold at auction over the last two years has increased by 40% .A sale via auction typically completes within 28 days and with the buyer legally bound to pay a 10% non-refundable deposit at the fall of the virtual gavel, the chances of the sale falling through are reduced significantly. The faster turnaround time is also a huge incentive for selling via auction, leaving you able to move onto your next property investment within a month of going onto the market.
Another benefit of selling or buying via auction is the transparency in the process. Auctions allow buyers to see where the bid is, and where it’s going. Not only does this provide a far greater level of transparency compared with something like sealed bids, it also often ends in a higher sale price. With competitive bidders and a fast-pace, an auction will often drive-up prices, which for anyone selling a property, is the ideal end-result.
This transparency also shines through with the legal pack which is a part of the auction process. Unlike a private treaty sale, this gives a buyer full access to the legal documentation of the sale ahead of bidding so that there are no nasty surprises that could jeopardise the sale. It also provides the buyer with the opportunity to seek clarity ahead of the auction on any points they would like to query before they are financially committed to the purchase. We always recommend a potential buyer has their solicitor read over the legal pack to ensure everything is crystal clear and you are completely happy with what is on offer before bidding.
When it comes to property investment, it’s been proven time and time again that often, it’s not what you know, it’s who you know. A sale via auction gives you access to a range of experts including an experienced auctioneer. Unlike a private treaty sale that is done just via an estate agent, many sales via auction also benefit from having both an experienced estate agent and auctioneer working on the sale. With extra knowledge and expertise working on the property, the chance of a sale that is beneficial for all parties increases. With the number of properties being supplied to auction via estate agents doubling in the past 24 months, it’s clear to see that the auction route is a tried and tested option that has a successful outcome .
In addition to the benefit of the additional expertise, properties sold via auction also receive double the exposure as will be marketed by both the auction house, and the estate agent. This results in more potential buyers being reached, greater interest in the property and a higher chance of a successful sale.
Historically, auction sales have a reputation for ‘problem properties’ which for some property investors is what makes buying via auction the preferred route. Whilst it is true that auctions are the best place to sell certain types of properties such as short lease flats, properties facing EWS1 form issues, properties that High Street banks won’t lend on, properties with structural issues, etc, it is also equally true that good quality, problem-free, properties sell just as well, especially whenever there is going to be more than one person interested in that specific property.
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