Auctions are a popular way of buying a property. In 2018, over 26,000 homes in the UK were bought at auction. And those sales were worth a total of £2.89 billion.
The rise of online auctions
COVID-19 has affected the way auction houses operate. Social distancing has meant physical auctions have not been able to take place. While lockdown measures are easing, things are not yet back to normal.
Auction houses have responded by looking to creative new solutions. As such, many property auctions are now taking place online, with buyers able to follow and bid on an auction in real-time. Also, prior to an auction, bidders are able to take virtual tours of properties.
Although an initial dip in auction sales was seen by Allsops between February and April 2020 (26%), The transition to online auctions has been positive. In April, Savills recorded £18.5 million worth of property sales at auction, and £27 million of sales in May. Based on these results, we are likely to see more firms offering online auctions in the coming months, if they haven’t already.
Prices are also rising at auction. There are currently less properties available at auction, 65% less than a year ago according to Savills, which is having a knock-on effect on the sale prices of the stock available. The average purchase price has increased by almost 40% in this time. The challenge for buyers at auction is potentially having to find finance quickly, for a slightly higher price than they may have been expecting.
Taking advantage of bridging loans
Arranging a loan in 28 days is risky when dealing with a mortgage provider. There is a chance of the capital not being available on time, considering the average time taken for approval is 30-45 days. The transaction can fall through and the buyer could lose their deposit.
That’s why bridging loans are popular for auction purchases.
We specialise in auction finance. We can deploy bridging loans within days of receiving an inquiry. We have expertise dealing with buy-to-let investors as well as businesses.
Get in touch for more information about our auction finance products. Email firstname.lastname@example.org, or visit our dedicated auction finance page here.