Property auction finance, big opportunities for brokers

As landlords and developers are increasingly using limited companies to acquire buy-to-let investments, clients buying at a property auction offer the potential for brokers to increase the number of bridging finance cases they can complete.

The trend of buying property at an auction house is mirroring that within the wider landlord sector and should be a target market for brokers with clients investing in property.

Not all buyers are aware of the broker route to help source the finance they need to make a purchase at a property auction, but there is clearly a gap in the market for brokers to ensure clients are receiving good advice.

This is particularly so given the time pressures involved and need for reliable lending. Most auctions require completion within 28 days, or for some it can be as little as 14 days, so brokers can also help a buyer to put the necessary funding in place before the auction too.

If buyers are unable to complete the purchase there can be steep penalties, legal action and the risk of compensating out-of-pocket sellers. This is why it’s vital for buyers to get the right lender that can complete the finance to deadline on almost any type of property.

Property auction finance

Brokers can capitalise on property auction finance

We’ve noticed an increasing number of professional buyers are choosing to buy properties at auction, rather than the traditional sales route, which has presented a real opportunity brokers should not shy away from.

The property auction market was previously seen as one which was unpredictable and only sold repossession or problem properties. Now, it’s an environment that provides a quick, easy and fair way of securing or selling a wide range of investment assets, such as HMOs, retail units, semi-commercial properties and purpose-built rental flats.

There are numerous lenders operating in this space and many products available on the auction market, and as with standard residential mortgages, brokers should be encouraged to seek assistance in sourcing the most suitable finance option for each customer and property profile they are looking to source funds for.

With more landlords buying under a limited company, they are also more likely to be repeat purchasers with long-term investment strategies, and brokers can benefit from ongoing relationships and more regular funding requirements.

Brokers are well-placed to discuss the benefits and possible pitfalls of buying at property auctions with clients. By working closely with buyers, sellers and developers who are active in the market, this could lead to an increase in their income across the residential, commercial and buy-to-let markets.

Not only that, but brokers are able to earn commission once a bridging has been put in place, and again if the property is refinanced to a longer-term mortgage. Although the process is slightly different from a traditional sale, brokers don’t need to be an expert in the field. All they need to do is speak to a specialist distributer, such as Clever Lending, who can assist with the application and deal with the customer on their behalf if required.