WITH repossessions on the rise, property auctions are a topic on everybody’s lips. While you might not be interested in a flat in Ireland, the increasing supply of homes under the hammer has certainly sparked the British public’s interest in the market.
Charles Lucas, an auction expert at Chesterton & Humberts, says there are more auctions being held and more people attending them than ever before. But why do people want to sit in a room together and go head-to-head for properties that are quite often in need of work?
The answer, it seems, is a combination of auction houses’ unusual offerings and the transparency the process provides both buyer and seller. Lucas says: “It’s nice to know who you are competing with, not to mention, the certainty that comes after the hammer falls.” He explains that once an auction winner is called, completion is usually required within 28 days, meaning that nobody can back out of the deal without facing penalties.
These circumstances mean that anyone in a strong cash position will find auctions appealing. But this does tend to bar many first time buyers. Lucas says: “I’ve seen a few first time buyers, but they tend to be the exception rather than the rule. That said, auctions have become friendlier places recently. Auctioneers are making more and more effort to welcome in new people.”
So will any old property go in an auction? Certainly not, says Lucas: “Not all properties are suitable to be sold at auction. Those that are suitable tend to have a special angle.” This can mean anything from properties in extremely popular locations to those with great potential, but in need of a lot of work. This results in auction catalogues listing everything from development sites with planning permissions already in place, all the way to glamorous listed buildings with acres of land.
While there are opportunities to score a bargain, reserve and guide prices on most properties mean that the seller won’t go home short changed. Reserve prices are kept secret and the property will not be handed over if the bid fails to reach it. The guide price, however, is published for all to see. This is usually a strong indication of the reserve price. Lucas says: “The reserve isn’t always the same number as the guide price, but it is quite often the case.”
Lucas warns that potential buyers must do their homework before the auction: “While there is no substitute for going to the property and looking around, reading the conditions of sale is utterly essential.” Many recommend dragging a builder or surveyor along to the viewing to give you a more accurate picture of the state of a property.
London offers stacks of options when it comes to auction houses: Allsops, Barnard Marcus and Mustbesold.com are all London-based with good reputations. If you are thinking about buying something from an auction it’s a good idea to go along simply to watch a few sales in action before you get involved.
With areas of the country struggling after the recession and the supply of auctionable properties going up, those with cash to splash may find that now is the time to see what hidden gems are going under the hammer.