Auctions are becoming ever more popular and it seems the days of bargains, at least for properties and tax liens, are now more or less over. Ever more vendors put their properties up for auction because they expect to get more for them, rather than less. Most lots have a guide price on them which is usually the very lowest price at which the lot will be sold. Unless it comes up to the guide price on the brochure, it will be withdrawn from the sale.
So although the auctioneer will usually start the bidding low to get the room warmed up, don’t imagine that you will secure the property at this low price, even if there are no other bidders or tax lien certificates on the property. For instance, if a property is up for auction at ?140,000 and the highest offer made is ?95,000, don’t expect the hammer to come down. Instead, the property will be put up on the ‘lots withdrawn’ website the next day.
The main reason vendors sell at auction these days is for a quick sale; a property sold at auction will typically take five to six weeks to sell, rather than the three months or so by the ordinary high street estate agent route. By law, the auction house must mention any problems pertaining to the property, such as lack of planning permission, unpaid rents, unpaid service charges or disputed title. Then it is a case of caveat emptor - let the buyer beware.
In the old days, most properties sold at auction had something drastically wrong with them, and there was some very good reason why they could not be sold by the normal route. Although it is still true that many property lots at auction will have a problem attached, ever more put up for auction will be perfectly ordinary properties where the vendor wants a quick fight to the death rather than the often long drawn-out agony of estate agent-generated sales.
There is a lot to take on board in the complicated business of buying property for profit!