Buying More than One House at Auction

Property auctions are used by all sorts of people now, from first time buyers looking to get their first property and onto the first rung of the property ladder to seasoned property developers who make a living out of doing up properties. For the former going to a property auction is a new experience and probably something they won’t do again – simply because it’s not every day you buy a new house. For the latter however visiting property auctions could be a regular occurrence.

Property developers and investors who visit property auction may not just be looking for one property. They may be wanting to ‘buy in bulk’ so to speak. For example they may want to buy a few flats in a new build trendy apartment block to sell on to young professionals. Or they may want to buy a whole street of run-down terraced houses to do up and rent out. They may even want to buy adjoining houses and knock them into one.

Regardless of how many properties are bought at auction the process is the same. The buyer will attend the auction and make an offer on the houses. If several houses come under one lot i.e. if the street of houses is auctioned all together then the process is exactly the same as if bidding on one property. If the houses are offered separately then the buyer just has to do the same thing on each lot.

Often the seller will offer a discount if the houses are sold in bulk i.e. the terraced street or the apartments in the trendy block. This is at the discretion of the seller and does not affect the way the sale goes.

The buyer will have to pay 10% on the day of the sale price on the day of the auction so if he or she is buying in bulk they will have to be prepared to pay a pretty hefty deposit. Once they have done this they have 28 days to pay the remaining 90%. They will therefore have to start organising mortgages immediately. Most mortgage lenders take longer than 28 days to process a mortgage so it may be necessary to get a bridging loan.

A bridging loan is a short-term loan that ‘bridges the gap’ until a long-term loan or mortgage can be put in place. The bridging loan is then paid off by the mortgage. Bridging loans are only supposed to be used for short periods of time and because of that they have high interest rates. Make sure you are able to get a mortgage before you take out a bridging loan otherwise, if you have the bridging loan for longer than intended, you could end up paying a lot of interest at a very high rate.

Buying in bulk at auctions is really just something experienced investors and developers do. If you are a newcomer to the world of property auctions don’t bite off more than you can chew. If you’re looking at becoming a property investor start with one property and see how you get on.

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