Why do houses go to an online property auction?

Anyone who's ever been involved in the buying or selling of a house knows that the most common route of completing is through an estate agent, but it's by no means the only option available.

Many residential properties find their way to auction houses, where buyers can pick up unexpected gems, and sellers have the benefit of selling quickly, sometimes with the prospect of making more money than expected if the bidding process goes in their favour.

So why do houses end up at an auction? Let’s run through some of the primary reasons.

There are mortgage problems

The first and perhaps biggest reason why a house goes to a property auction is that it’s difficult to mortgage. This can be caused by a number of factors, all of which are related to the condition or status of the house.

Maybe it’s an older property built in a way that wouldn’t be standard process these days. Or there could be issues relating to location, planning, or unresolved legal concerns.

 Any of these issues, and more beside, make some homes a harder sell for estate agents and the prospective buyers they may find. Taking a property to auction opens it up to a different audience likely comprised of investors who are more willing to take a risk or put the work in to resolve the problems and sell it on. 

The property is tenanted

Rental properties that are still occupied by a tenant provide estate agents with unique challenges and can be more difficult to sell as a result.

In cases such as these, it’s not just the landlord who can organise and give the okay to key stages of the process. Instead, the tenant has a similar level of influence; they must give their approval to every viewing and be given at least 24 hours written notice before viewings.

 While challenges still exist and the tenant still has rights, property auctions are often seen as a better route for selling tenanted properties. This is because viewings are grouped into a handful of open days and those who attend auctions are often existing landlords looking to expand their portfolios.

 As a result, they’re already familiar with the process and associated challenges, and a sale is more likely to be concluded in a timely fashion.

 The property has been inherited

 Inheritances are sensitive subjects at the best of times and they can be intensified when something as valuable and emotive as a home is involved.

If the person inheriting a home isn’t looking to live in it, they’re often keen to sell it on as quickly and effectively as possible. This can take time for a property in good condition, but if it’s in need of repair it becomes even more of a challenge.

 Taking the home to auction opens it up to buyers who are accustomed to these challenges and are more likely to accept the risk and financial investment required. As such, it can lead to a faster sale and a better result for the seller.

 The property is a repossession or foreclosure

Similarly, homes go to auction if their owners haven’t been able to keep up mortgage repayments and the property has been repossessed or foreclosed.

Again, time is a key consideration in these cases and auctions are seen as the best way to get properties in front of prospective buyers who understand the process and are likely to have the means and desire to snap such properties up quickly.

As we’ve shown, homes go to a property auction primarily because of the circumstances that surround them, but they’re also seen as quick and efficient ways of securing a sale because they’re attended by experienced people who are well-accustomed to the process and ready to buy.

 Complications are therefore less likely to emerge and there are penalties in place for any buyers who do try to back out of their bids.