Property auctions are the ideal place to find renovation projects to really get your teeth sunk into. They offer properties that you won’t find anywhere else because those that need a little extra work usually aren’t advertised by estate agents as they tend to favour ready to move in properties. But what really goes into a renovation project at auction and just why should you consider taking the plunge? Let’s go through the pros and cons of the process.
Pros:
Speed to get the project off the ground fast
Auction is by far the fastest option for buying a property, and far quicker than going through an estate agent. After the fall of the gavel and the exchange of contracts (on the same day), the sale is typically completed in just 28 days! That means no long waiting periods, so you can pick a project then get started on it in just over a month. Better start looking at paint samples! Not only do auction sales go through fast, but there are lots of them too. Auctions are usually held monthly/bi-monthly so even if you don’t find your dream property this month, just wait to see what great finds crop up in the next catalogue.
Fantastic opportunity to get a bargain
Auctions are a great place to find hidden gems. Properties sold at auction always start with a lower price than what they would be sold at through traditional means, to be a starting point for the bidding to go higher. But you never know who else is going to be bidding and if interest is lower on certain plots, you could come away with a steal!
Great investment
Buying a renovation property at auction is a great way to make a profit, whether you are looking to sell or turn it into a rental property. Not only can you improve the quality of the property in renovation, but you can also maximise the potential of it by converting old rooms or unused spaces, like lofts or basements, or adding extensions, which will increase the value considerably.
Prepared legal packs
All properties sold at auction come with prepared legal packs with all the documents pertaining to the property by the seller and their solicitor. These include; Official Copy of Register of Title (Office Copy Entry), title plan or copy deeds to the property to show evidence of ownership and the boundaries, search results, including Local Authority and Environmental Searches. You can of course perform your own checks and reports, but a vast amount of the information is already provided for you.
Cons:
Mortgage restrictions
Depending on the state of the property, you might not be able to get a mortgage (if you’re requiring a mortgage to fund your purchase). There are restrictions on properties that are uninhabitable, so you might find an extremely cheap property with amazing potential but be unable to get any financial aid in buying it.
Short amount of time for a lot of research
With such a small window of time between the property going up for auction and the auction day, it does mean there is a lot to do to be ready to bid and a very short timeframe to do it. You need to understand what will go into this project, what risks are involved and what your budget will be. Arrange viewings on the property including a visit by a builder or architect to see what needs doing and if it can be done. It’s also worth doing research into the area to see what has sold there and for how much, also to see what other renovation projects have been done, as it might be a good indication of what’ll be approved.
Risk of not winning your lot
You could have your heart set on your dream project, spend weeks going over plans with your builder, talk with a mortgage advisor about securing finances, then come auction day you lose out on the bid. Nothing is guaranteed at auction, and a property listed at a good price might have intense interest from many parties. The plus side is that there’s always another auction just around the corner!
Hidden costs
Like with all renovation projects, you can make the calculations to plan your budget perfectly, but costs can still balloon along the way. Things can go wrong, inflation can affect labour and building costs, and projects can just take longer than initially planned. It’s always best to overestimate how much things will cost than to stretch yourself completely just to get it off the ground.
Buying a property at auction is a fast process and often a great way to find a bargain. As long as you’ve done your due diligence, researched thoroughly, kept to a realistic budget and planned accordingly, you stand to come out of an auction renovation smiling!
