You may not think auctions are the way forward if you are a landlord looking to offload properties bought in the Boom. However, they can be another sale type to explore as properties can potentially exceed their listing value, and they provide a much larger opportunity to achieve a timely sale. Auctions really can be a valid alternative in the current climate as they can generate interest from multiple parties which increases bidding.
Many first time property investors purchased city centre apartments during the ‘boom years’ initially as a short term investment to sell on at a profit. Many of these apartments were bought off plan at indicated below market values, however when prices faltered and began to decline the option of selling them on disappeared, forcing many would be shrewd investors to enter the lettings market.
This happened to many property experts and novices alike with the greatest casualties being Manchester, Leeds, Birmingham, Liverpool, and Newcastle. The one exception to the rule being London where prices dropped although quickly recovered and continued to rise due to demand and affordability amongst London’s more affluent.
Whilst the market for rentals is very strong at present and rents continue to increase, many first time investors would still like to sell due to various reasons. If your mortgage rates have gone up and they are no longer at sustainable levels the only option may be to sell, if you are already achieving the best possible rental price (meaning you cannot increase income through the property).
Doesn’t selling at Auction mean selling for a lower price?
Not necessarily, whilst historically investors look to buy at Auction to pick up ‘cheap’ below market value properties, modern auctions specifically online auctions are much more accessible for private homeowners to sell and potential private buyers to purchase. As a direct result of this any type of property can be suitable for auction, not just repossessions or dilapidated properties in need of renovation.
Auctions are a potential avenue to overcome the obvious concerns with selling in the current market – being that the property isn’t worth what it was purchased for, it may not even sell, or you may receive very low offers.
How to make money through selling at Auction
Online auctions are becoming ever more popular as they are accessible to anyone both in terms of selling a property and also potential buyers. There are no restrictions on geographic locations and generally no entrance fees. There are a couple of ways to look at this, you can set a reserve price that you don’t want to go below, and if the reserve isn’t reached there is the option to re-invite further bids at close of auction. Alternatively if the property is tenanted you can potentially sell it as a tenanted property (which could mean you get more interest from investors although also may result in potential shrewd investors not offering up to the reserve price).
One strong consideration is that you have nothing to lose even if the property doesn’t sell at auction if you haven’t paid an entrance fee as you will still have the property up for sale by standard sale. So go on give it a go, who knows you may be pleasantly surprised by the outcome.**Nothing on this website should be confused with financial or legal advice. If you need this, or any other type of advice, please seek the help of a competent professional. In addition, because real estate laws change all the time and differ from state to state, and even city to city in the same state, everything in these pages should be considered general marketing advice and ideas. Please see link to full Disclaimer at the bottom of this page.