At auction, there are bargains for cash-rich buyers

PROPERTY prices might well be looking up at the moment, but the market is still gridlocked. Buyers struggling to get mortgages and others worried that they might lose their jobs. It&rsquo;s no fun being in a chain right now. Which is why auctions are becoming more popular.<br /><br />Gary Murphy, partner and auctioneer at Allsop, which specialises in property auctions, says that now is the time to start looking. &ldquo;The market is at its lowest point or in ascendance. It&rsquo;s a good time to buy, but now that we&rsquo;re out of the summer period, we&rsquo;re getting feedback from buyers that they&rsquo;re ready to re-enter the market so prices will rise.&rdquo;<br /><br />Auctions could be one of the only ways to bag a bargain. Paul Mooney, an auctioneer for Savills, says that properties that are with estate agents at &pound;350,000 can start at &pound;200,000 at auction and go for &pound;250-&pound;300,000. Fathom, a property consultancy, say that the average property sold at auction last month went for 30 per cent less than its open market price.<br /><br />The reason is that developers, builders, local authorities and councils make up about 85 per cent of sellers at auction &ndash; they are often more concerned with shifting properties than getting the best price.<br /><br />On the buying side, private individuals are rapidly catching on to the benefit of auctions. &ldquo;It used to be all property professionals, but you see a lot more normal people coming to buy stuff at auction now,&rdquo; says Mooney.<br /><br />While the normal property-buying process is often drawn-out, auctions are quick and easy. All you have to do is pay a 10 per cent deposit on the property on the day. After that, the whole process takes 28 days to complete. &ldquo;If you&rsquo;ve got a bonus, that&rsquo;s a ready made deposit, so this format is perfect for you,&rdquo; says Mooney.<br /><br />In many ways, auctions are easier than buying on the open market. The auctioneer provides the mandatory documentation such as the HIP, and it is the bidder&rsquo;s job to get the property they want surveyed in advance. <br /><br /><strong>FIRST TO REACT</strong><br />Property auctions are not traditionally high-brow affairs like art or furniture sales. They are composed of a mixture of homes that might not sell on the conventional market but which need to be sold. However, you can also find grand old homes belonging to people who died without leaving an inheritor, so it&rsquo;s possible to find the kind of pile you&rsquo;d never even be able to consider on the market with an estate agent. &ldquo;You can find some absolute corkers,&rdquo; says Mooney, &ldquo;though they don&rsquo;t necessarily come up every day.&rdquo;<br /><br />You can count on the auction market to be the first to react to changes in demand. &ldquo;Auctions came to a standstill when the market began falling off,&rdquo; recalls Mooney, &ldquo;and we had to react quickly to that by being really realistic on reserves. We came to the bottom of market much faster than the agents and before you know it people were saying &ldquo;hang on, auctions look really good right now.&rdquo; They still do, so don&rsquo;t miss out.<br /><br />Savills residential property auction is on 14 Sep (for details see, Allsop&rsquo;s is on 15 Sep (<br /><br /><strong>NEED TO KNOW </strong> BUYING AT AUCTION<br /><br /><strong>&bull;</strong> You&rsquo;ll need to get the property you plan to buy surveyed before you bid. Beware that this could lose you &pound;1,000 in the off chance you don&rsquo;t win your bid. <br /><br /><strong>&bull;</strong> Try to bid before the auction &ndash; in many cases the auction house will accept an offer. This saves all the risk and variables of bidding on the day, and ensures you waste less time and money preparing your finances and paperwork. <br /><br /><strong>&bull;</strong> Prepare your finances: make sure your mortgage lender is ready to act fast &ndash; you have to pay your 10 per cent deposit then and there and have only 28 days to pay the rest. In addition, there will be auctioneers&rsquo; fees and stamp duty. <br /><br /><strong>&bull;</strong> Timing is key: be the first to get your hands on the auction catalogue so you can get a head start on the pre-purchase process and refine your bidding approach. <br /><br /><strong>&bull;</strong> Put a cap on your bidding and stick to it. It&rsquo;s easy to get over-excited in the tense environment of the auction.