The property at 27 Noel Street in Gainsborough is in a state of utter disrepair with many rooms covered in rubbish and others with extensive fire damage.
The bidding started at just £7,000 before being sold for £29,500. The house needs completely renovating after it was hit by an arson attack on 17th July last year.
Crews from Lincolnshire Fire and Rescue Service were called at 9.30pm after neighbours reported seeing smoke billowing from the property.
No one was inside the house at the time of the attack.
Arsonists set fire to the shed and the blaze quickly spread to the first floor of the Victorian property.
The home has two bedrooms, running water, gas, electric and mains sewer connection.
It comes complete with a rear yard, a brick outbuilding and double glazed windows.
The kitchen has no oven, but does include a fridge.
The adjoining front room has boarded up windows and an upturned sofa.
Images of the upstairs reveal heavily fire-damaged bedrooms with filthy stains covering most of the walls.
Meanwhile the bathroom, which features a toilet with no seat and is painted purple, but is described as having a three piece suite comprising panelled bath and pedestal wash basin, mid flush W.C. and single radiator.
While many parts of Britain are going through a housing boom and the average London home now sells in the region of £400,000, the property is believed to be the cheapest in the country.
It was expected to be sold with a 10 per cent deposit and the agents say it will only take eight weeks for completion.
But in general house prices in Gainsborough are amongst the fastest rising in the country according to a recent report.
Figures from property websire Zoopla show that residents have enjoyed the biggest house price gains since October 2013.
The value of the average property has jumped 8.45 per cent to £133,230 which is more than double the increase nationally.
Managing director at DDM Residential, Graham Walker, said: “Gainsborough and the northern Lincolnshire region never saw the great highs and lows that other towns and cities did before the down turn in 2007.”
“The area has always been stable and good value for money.”