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Homes under the hammer are selling for less than half the price of an average home, according to data from auctioneers.
In the past 12 months, 31,900 homes have been auctioned for £3.72 billion - an average of £116,670 a property.
In comparison, house price data from the Office for National Statistics (ONS) puts the price of an average property at £291,000.
The difference between buying directly from a builder or owner and at auction is £174,330.
The most difficult property to sell is a tenanted flat, primarily due to fewer investors seeking them as investments, says PropertyMark President and auctioneer Richard Worrall.
Auction data analysis by the Essential Information Group (EIG) reveals that the number of homes going to auction has surged by 22.9 per cent over the past year, from 25,496 to 31,900.
The homes were sold in 22,243 lots - a 16.3 per cent increase from last year’s 19,132 properties, but successful sales dropped 5.4 per cent from 73.7 per cent to 69.7 per cent.
The total value of homes sold at auction was slightly up year-on-year from £3.59 billion to £3.72 billion, a rise of 3.4 per cent.
“The data also reveals a year-over-year increase in lots offered, lots sold, and total raised, showcasing the market's adaptability and potential for growth,” said David Sandeman of EIG.
“East Anglia stood out with a significant surge in figures, primarily due to auction date variation. The key auction areas like the Midlands, North East, and South East also maintained buoyancy and saw encouraging signs of growth. However, it's important to note the contrasting trend in Wales, where the indicators are declining. This is also due to auction date variation.”
The golden rule of buying a home at auction is to arrange a viewing and read the legal pack.
It’s a good idea to take a builder on the viewing to understand what work needs completing and how much it’s likely to cost. Order a structural survey if you are concerned about the state of the building.
Ask a solicitor to look over the legal pack. The documents should offer confirmation of the plot boundaries, a copy of the deeds and evidence of ownership. The pack also includes searches, planning consents and details of any works carried out under the local council’s building regulations.
Speak to local estate agents about the likely selling and rental prices after a refurbishment.
Bidding can be in person, online or by telephone.
On auction day, set a budget for the property you want and stick to it. Auction homes are cheaper than buying directly but add refurbishment costs, working capital, selling costs, and taxes.
Working capital will include borrowing costs, council tax and utilities while carrying out any refurbishment.
Always set a contingency for unexpected work - this should be at least 10% of the budgeted building works.
At the auction, decode the difference between guide and reserve prices. The auctioneer will not reveal the reserve price but publish a guide price. The guide price indicates the reserve price, the lowest amount the seller will accept. The reserve price is often around 10 per cent more than the guide price.
If you are the winning bidder when the hammer goes down, you must abide by the auction’s sales conditions.
These can vary between auctions, so ensure you read and understand the terms before bidding.
Typically, the winning bidder pays a 10 per cent deposit on the day and is given two to six weeks for the purchase to complete. Any additional costs are detailed in the terms and conditions before the auction.
If the property fails to meet the reserve or does not sell for any other reason, the auctioneer may negotiate a sale after the auction closes.