Do I Pay to Attend the Auction?

Property auctions are fast becoming one of the most popular ways of buying and selling property. This is down to two main reasons. The first is the credit crunch. Regardless of whether you’re interested in finance or not you cannot have escaped hearing about the dreaded crunch. The UK housing sector is in crisis, and it’s all down to the US market.

Lenders in America lent money to people who really should not have been getting mortgages. Brokers encouraged them to apply for loans they could not afford to pay back. These people, of course, defaulted on their mortgage payments and had their homes repossessed. This badly affected lenders confidence and banks and lenders began to tighten their criteria. They were also afraid to lend to each other or buy ‘bundles’ of debt from other banks in case they couldn’t get the money back or the ‘bundles’ included defaulted mortgages, or ‘bad debt’ as it is known.

The problem is a lot of lenders in the UK were affected by this and as a result tightened their criteria, making it more difficult to get a mortgage. This led to a slump in the housing market so house prices began to fall. On top of this, since the banks and lenders weren’t lending money to each other they were unable to offer the kind of rates they had done before and as mortgage rates rose many homeowners struggled to keep up with their mortgage payments, hence their houses were repossessed – and then sold at auction to ensure a quick sale for the lenders.

The second reason for the increase in popularity is less negative. The increase in the number of property programmes on television more and more people are looking to become property developers. Properties at auction are often in need of repair so it’s the perfect place to go for a cheap house which the developer can then do up as he or she pleases.

But Does it Cost Anything?

If you are going to the auction to buy a property then the answer is no. You do not have to pay to attend although you do have to have 20% of the property price on you as a deposit. You should aim to arrive early as the auctions can get very busy!

The fact the auction is free to attend means you can go along for a ‘dummy run’ before the auction you are bidding in just to see how things work. This is a great idea if you have never attended an auction before.

If you are attending the auction to sell your property then you will have to pay a commission fee once the property is sold, normally around 2.5% of the price the property is sold for. This is paid to the auction house. You may also have to pay towards the advertising that is done prior to the auction to show punters what houses are on offer, but this depends on which auction house you use.