Every year, thousands of properties in the United Kingdom are sold way below their market value. Majority of these properties are repossessions which are sold at auctions at 10% to 40% below market price. Nowadays, property auctions are no longer just for the elite. Smart investors can come across fantastic opportunities and purchase the perfect property at rock-bottom bargain prices.
People do find bargains at property auctions. For example a studio flat in London sold for ₤10,000 only while a flat with a market value of over ₤100,000 sold for just a fraction, at ₤15,000. There are thousands of homes available at property auctions. It is just a matter of finding out where the best and biggest bargains are. It is reasonable to expect a 10% to 40% price reduction for a property bought at an auction than if it were bought through an estate agent.
At property auctions, the properties at the best bargain prices are often repossessions. Most of them are residential properties, or homes taken from owners who have defaulted on the mortgage, and rundown or dilapidated properties that cannot be sold at its current state. The attraction to repossessed properties is that they are often located in a prime area.
The number of repossessed residential properties offered at auctions rose in recent years. The increase is driven by the rise in interest rates and thus, higher mortgage costs. This caused the large number of repossessed properties going under the hammer at auctions.
Repossession is often a very sad thought but for the careful and smart buyer, it could also mean an opportunity to buy that dream property. Before jumping into a property auction to buy the next repossessed investment, it is best to know some tips and tricks of the trade to arm yourself beforehand.
Repossession auctions are not as easy to find as you might think. Due to the demand for cheap repossessions, auctioneers often have some regular investors and thus, do not even need to advertise as much. For most novice investors, you might want to subscribe to a property magazine or phone an auction house to know when their next auction will be held. Getting into an auction house's mailing list will alert you on future auctions.
Most banks, building societies and auction houses do not immediately reveal that the property they are selling is a repossessed property however the catalogue will often state that the property is being offered on behalf of a mortgagee in possession - i.e. a repossession. The best thing to do is to ask the auctioneer directly. He is bound to disclose the status of the property because there are laws that prohibit auctioneers from giving false and misleading information about a property.
Lastly, make sure you understand how an auction works before purchasing property. For most first timers, it is important to take an expert along with you or someone who has been through an auction before. Let someone guide you through the auction process and don't be afraid to ask questions. More importantly, know what kind of property you want before heading off for an auction. That way, you will not be coerced or influenced by anybody into buying a property you do not really want.
Copyright (c) 2008 Parmdeep Vadesha
Article Source: http://www.orbitaloc.com/
Parmdeep Vadesha is a property investment expert and founder of the largest community of property entrepreneurs on the web who buy below market value properties from distressed homeowners facing repossession, divorce and bankruptcy. He writes a monthly newsletter for over 70,000 property investors worldwide - www.Property-System.com
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