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How to Take Advantage of Property Auctions

By Parmdeep Vadesha

Republish: EasyPublish™ Published: 17Dec2008 Word count: 506 Viewed: 55 time(s) Get Free Content For Your Site

The media may be splattering news after negative news about the UK property market being in trouble. But that doesn't mean anything to the numerous smart investors who are now crowding into property auctions across the UK. As the credit crunch continues to bite, more homes are being acquired for prices that many buyers never thought were possible. If you're considering obtaining more properties for your portfolio, you may want to get a few tips on how to take advantage of property auctions.

Auction houses are teeming with different properties that were either repossessed or were originally intended to be investment properties but suffered a shortage in tenants. As a result, property investors now have a wide array of affordable properties to choose from. Despite the grim outlook in the property market, property auctions report that they have been selling between 85% and 90% of each catalogue. This is because many property investors believe that there is still some money to be made from property as long as they are purchased at the right price.

According to the Council of Mortgage Lenders, repossessions make up a big percentage of auction catalogue entries and the figures are expected to rise even further. A lot of these properties were purchased off plan two or three years ago when property developers offered them to investors along with incentives. This was also the time when mortgages were not at all difficult to obtain. Many of the properties are city-centre apartments that were sold with promises of high rentals, but were left standing empty. Now they are being put up for sale at prices significantly lower than they were originally sold for - most often below their market value.

For an investor considering additions to his portfolio, property auctions are sensible places to pick up properties on the cheap. If you haven't been to an auction before, do your research first and put your finances in order prior to attending an event. Two things to remember: be ready to put down 10% right away and pay the balance in 28 days.

There are a number of ways to take advantage of property auctions. One is to try and enter at the beginning of the event and make a bid on the property before the sale. However this strategy may only work with private sellers and may not work when the vendor is a bank or a public entity that has an obligation to get the best price for the owners of the property. One other way of taking advantage of property auctions without actually making a bid is by buying a property that has remained unsold because it has not met the reserve price. The advantage is that you can purchase it later at a fixed price and often subject to flexible terms.

For many investors, property is a better pension than any other type of investment. And when bought at property auctions where prices can go below market value, a property purchase becomes an even more viable and wise move.

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