Mark Mugliston, Residential Sales Manager at our Diss office, shares some good news on the wider property market and industry.
I expect you’ve all seen the TV show and thought ‘I’d love the grab a bargain like that.’ Whilst some good buys are undoubtedly out there, like any TV show take it with a bucket of salt.
Selling via auction is becoming increasingly popular and it’s not just those properties that seem to be unsellable that are now being offered that way.
Our most recent property auction offered lots as varied as a charming four bedroom Victorian terraced house and a 1930’s bungalow suitable for renovation through to a large 66 hectare farm and buildings.
Interestingly, and I’m not just blowing our own trumpet here, all the lots reached at least their reserve prices and sold. Some of them were way over our estimates with good competition for all of the properties offered.
This tells us three things: anything is suitable for auction, many buyers are happy to take the perceived risk in purchasing this way and, most importantly, the demand is there.
Selling via auction might mean you get a little less for your property as a trade-off for selling it on the day. Remember that on the fall of the hammer you actually exchange contracts and avoid all those chain woes and worries well known to anyone who has bought a house under the UK system. However, the sale we’ve just had probably demonstrates that the gap between the price at auction and the one you would get on the open market is closing.
From a seller’s point of view you can look on the bright side. When the hammer goes down, both sides are committed so you know the vendor can’t have a change of heart either.
Buyers are now doing their research into auction properties more thoroughly. They look carefully at the legal packs provided and visit the property quizzing the auctioneers and agents to garner as much info as they can. Contrary to popular myth, we will offer open and honest advice to potential buyers about a property and the work needed or highlight issues perhaps not obvious. We don’t want to waste your time any more than we want to waste ours.
As with any purchase, doing your homework is essential. You will also need to know if the property is mortgageable – and the agent will help you with that – as the criteria aren’t always clear and some older properties often don’t have the necessary infrastructure to qualify so you should always check with your lender or mortgage advisor.
As a buyer you have got to be in possession of the funds to be able to bid at auction – so if you have a property to sell, you need that sold, done and dusted before being able to bid.
If you do decide to ‘go for it’ at auction, don’t get carried away and stick to your budget. As with any property that needs work, your best bet is to work backwards from what it will be worth once it’s all sparkly and new. Take away the cost of the work and you have a rough idea of what you should be paying for it. Of course if you are buying for yourself, you will probably be prepared to pay a bit more as you are not looking to make a margin as a developer would be.
Buying at auction can be great as long as you are disciplined about your budget and you have done your homework in advance to avoid any nasty surprises.