The Inside Edge
Buying property at a house auction is not for the faint-hearted, ill-prepared or risk-adverse.
That said, its a perfectly viable route to obtaining a house to live in or an investment property at a ‘fair rate’ if you do your homework. It is possible to pick up a bargain at auction, if you know what you’re doing and have a smattering of luck – but it’s also full of pitfalls for the uninitiated – who can end up getting much more than they bargained for.
Linton Chiswick recently argued that property auctions are the barometer of house prices – giving us an early warning of the direction of prices. This theory is based on the fact that as I stated earlier, auction prices are very fair – as they very accurately match buyers with sellers in a way that finds the exact highest price that someone is willing to pay for a property.
I looked around an auction property recently – a two bedroom semi-detached bungalow in the Vale of Pewsey needing more than a lick of paint. At £75,000 guide price (and strategically placed as lot 1) it attracted a lot of attention. The viewing we attended was characterised by youngsters with mum and dad, probably looking at any which way to get on the ladder – but who were soon frightened off by the sheer amount of work and money needed to get the place into a livable condition.
Our cursory inspection revealed damp walls, outdated electrics,deteriating asbestos gutters (and in the roof), no central heating system and nothing saveable in either kitchen or bathroom. A lot to take on for a non-tradesam or inexperienced investor or wanna-be homeowner.
House Auctions do have a lot going for them in terms of speed of sale - with a 20 – 30 day completion period bringing urgency and focus to the legal transfer process that can stretch to weeks and months in ordinary circumstances.
Although, this could all change. We’ve recently come across the Clear system of preparing the sellers’ legal pack prior to recieving an offer – in theory eliminating the to and fro between conveyancing solicitors and enabling an on the day completion. We’re watching this novel scheme with interest – one of those ideas that makes you ask ‘why havent we done this before?’
So, if you’re considering buying at auction, do your homework. Look at some properties, go to a few auctions with no intention of buying. Read up on the process, and look at opportunities with very critical eye.
This series of short videos from David Sandeman, Managing Director of Auction Information Company EI Group is a good place to start.
There are over 280 Auction Houses in the UK – see our property auctions UK page to see if there’s one near you.
Last year, 2010, also saw the launch of Zoopla online house auctions. I can’t help but feel that this will become a much more common form of house sales.
After all if people are bidding from out of the room using a mobile phone, why shouldn’t they bid from a computer with the extra security and manageability of online bidding? This also allows home sellers to extend the period of the auction – perhaps allowing more exposure to interested parties and raising the achievable price?
You may remember an article on this blog nearly two years ago Neil Singer of Click to Purchase (who offer online auction software services allowing any Estate Agent to offer an Auction service to sellers) argued the case for online auctions becoming the norm. It’s not now seeming as ‘revolutionary’ as it once did.