It is every home buyer's dream to move from submitting an offer to completion in just 20 working days. If you are one of the growing number of people who buy your home at auction, this is just one of the benefits you may experience, according to the Royal Institution of Chartered Surveyors (RICS).
Last year 15,514 residential properties were sold at auction, an increase of 12% since 2003. Although they account for only 1% of the 1.5m housing transactions which take place every year, auctions are growing in significance and popularity. Buying a residential or commercial property at auction has become increasingly popular over the last decade with over 1,000 property auctions held in 2005 up from 141 in 1996. Since 1996 property lots sold at auction have risen over threefold with the total number of lot sales now at 22,314 in 2005 up from 7,892 in 1997.
More people are turning to auctions to buy and sell property because of the simplicity and speed of the process, with deals agreed on the day. Auctions have become more open and transparent, and often an ideal place to find competitively-priced properties although many buyers are happy to pay a little more for the convenience and certainty of the auction room.
Most buyers are currently private investors. Auction properties for sale come from a variety of sources, including private sellers, investment funds, property companies, government agencies (such as the Met. police and the army) and banks. Over the last 18 months approximately 70% of residential properties that went under the hammer achieved an immediate sale with some sales achieving 95%. This is quite an appealing consideration for people who are looking for a guaranteed quick sale.
According to Richard Auterac, Chairman of the RICS Real Estate Auction Group: "It is easy to see why auctions are becoming more popular. Properties on sale at auctions are usually available at a competitive price. Auctions provide a platform for open and fair competition between bidders. Once the hammer comes down, neither the seller nor buyer can withdraw and the process is completed within a set time - with no danger of any link in the property chain breaking. Additionally RICS has recognized that the whole process is very different from the normal approach to buying and selling. In an effort to make the legal process more transparent and easier to understand, we have published a set of guidelines called Common Auction Conditions. Created by buyers, sellers, solicitors and auctioneers, the conditions have been designed to improve the auction process for all those involved."
The RICS also publishes Buying and selling property at auction - a 10-page guide to help owner-occupiers, developers and investors. It provides inside information on the auction process from both buyers' and sellers' perspectives, from checking guide prices to proxy or internet bidding.
