Buying property at auction

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Our cursory inspection revealed damp walls, outdated electrics,deteriating asbestos gutters (and in the roof), no central heating system and nothing saveable in either kitchen or bathroom.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.

Property & the Internet: a history of unfulfilled potential…

Ever since the property industry made its first bold steps online, the possibilities offered have been a gift for sellers and buyers alike.  From basic search to widgets, from Google Maps integration to social media engagement, pioneers in the property world have seized upon digital developments to reap the benefits of their “revolutionary” vision.   But how much of this has truly been revolutionary?

Every so often, we’re promised a real game-changer, but in almost all cases the changes are superficial and the game seems to stay the same.  Recently, there’s been a lot of excitement over both Google and Tesco venturing into the industry.  Again, we were led to believe this would herald a new era in online property sales.   Again, we were disappointed.

For as long as the big players in the property world (old and new) invest their time and money into window dressing, we will always fail to address the issues that really need our attention: significantly reducing the stress and hassle people experience when buying a home, making the whole process quicker and easier, restoring trust in estate agents, dragging intimidating property auctions into the 21st century, and ending gazumping forever.

These issues cut to the heart of what matters to buyers. They should also make us question how we, as an industry, use the Internet not to simply promote properties but also to close the deal.

This is what I had in mind when I created Click to Purchase – a transactional platform that enables people to buy property online at the click of a button or via real-time auction.  There’s no excessive haggling or negotiating.  No recurrent visits to the agent’s office.  No back room deals after an offer has been placed.  As soon as a bid is accepted, the contract is immediately exchanged online. It’s like e-commerce for property.

I’ve lost count of the number of times I was told “no-one will ever buy property online”.  But the platform has already been active in the commercial market for several months.  During this time, it has generated sales in excess of £15 million and thrived despite the financial squeeze.  There is obviously a hunger for this kind of innovation from buyers and I’m now hoping for this success to be shared across the residential market.

Very soon, all estate agents across the UK will have the option to invite their customers to buy via Click to Purchase.  Now, I believe this really is something special.  A game-changer.  Dare I say, revolutionary?

Author Biography: Neil Singer

Neil Singer has worked in the commercial property industry for over 25 years. In recent years he has been inspired by the power of the Internet and its use in business.  His passion for applying new technologies to traditional processes led him to create the Click to Purchase platform. Please visit the Click to Purchase website (http://clicktopurchase.com) and follow him on Twitter.