When you hear the word “auction”, certain things might spring to mind, and it’s unlikely that a new home will be one of them.
Antique furniture, expensive paintings, and a lot of raised voices perhaps, but not that pretty, picket fenced townhouse on the outskirts of the city you’d always dreamed of.
Despite what you might think, property auction houses are growing in popularity, especially where the commercial market is concerned. Research indicates that during 2015, private investors purchased £3.6 billion worth of commercial property, with £745 million of this being sold at auction.
With the rise in stamp duty for second homes, investors once interested in buy-to-let have now shifted their focus to the commercial market. With the outlook remaining resilient and returns often high, the benefits of commercial property often outweigh the drawbacks for investors.
This shift has been observed in the auction houses themselves, as witnessed first-hand by auctioneer, George Walker at one of the largest commercial auction houses, Allsop.
Also a partner of the firm, he mentioned that investors are looking to grow their commercial portfolio, adding that “the real draw must be the longevity of the income”.
Although you might be a little cautious of buying at auction, this method of getting onto the property ladder is not without its perks.
One benefit is price. If there are few or even no other interested parties, you might be able to purchase the property for less than you’d thought. Another potential plus is time – rather than having to wait weeks for the relevant documentation at auction, a binding contract is immediately brought into effect when your bid is accepted.
Usually being a little quirkier than the homes you’re used to seeing in an estate agent’s shop window, the properties are typically sold at auction for a reason. This could be anything from a difficulty with valuation to a complicated legal title, so it’s important you’re aware of what you’re buying.
Speaking to a legal professional can help you understand what you’re buying and give you a clearer picture of the process involved.