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Auction 'By the way think the site is great and have been to quite a few auctions St Albans, Watford & Bedford. I am making a nice little second income, but certainly not retiring, am going to take a week off work to check out the midweek sales to see if goods are any cheaper at these. Regards |
UK Property Auctions - Government Property Auctions - Property Auctioneers - Local Authority Sales - Repossessions - Buy to Let - Self-Build Property - Rent & Rentals - Estate Agents - Real Estate - Houses - Homes - Commercial - Investment Property Auctions can yield up a bargain With house prices now out of reach for many - despite signs the market is slowing in some areas - buyers are having to look harder for bargains. One alternative is to buy at auction, says Jane Hall. A glance through the daytime television schedules reveals that Britain is in the grip of auction fever, with programmes such as Bargain Hunt, Cash In the Attic and Flog It highlighting our love of a bargain. This love affair shows no signs of abating. But for those hoping to emulate the likes of David Dickinson and pick up a house "as cheap as chips", the auction room can be a nerve-wracking place. Yet a growing number of people are now looking to the auction room as a means of getting their feet on the property ladder. Buying at auction now accounts for an estimated 5pc and rising of all property transactions, according to the Royal Institute of Chartered Surveyors (Rics). Recent figures from online property database Focus show the value of residential properties sold at auction during the first six months of 2003 rose 12pc to £612m, helped by a 19.5pc increase in the average value of residential lots to £113,599. Buying at auction sounds like a dream, especially as the traditional method takes an average of 12 weeks from the day an offer is accepted until contracts are exchanged. During that time, buyers can be gazumped or sellers may decide to stay put and chains break. Almost one agreed sale in three now never makes it to exchange of contracts. A big advantage for saleroom buyers is that once the auctioneer's hammer falls, the property belongs to them and neither they nor the seller can pull out. The buyer hands over a deposit and may move in within 28 days. Around 25,000 properties now go to auction every year at more than 200 auction houses nationwide. Such sales - which are the norm in the United States and Australia - really took off in the UK in the 1990s when lenders were having to sell-off property they had repossessed, often at a loss, but couldn't sell on the open market. They became a magnet for buyers who wanted to take advantage of the lower prices and pick up a bargain. Although there has been a reduction in the number of auctions being held as the property market has picked up and fewer homes are being repossessed, they are still going. And they still attract bargain hunters. The reason why auctions still produce mark-downs is simple. Most properties being sold at auction are there for one reason. Their owners - and this includes lenders with repossessions on their hands - need a quick sale and are therefore often prepared to accept offers well below the market value. But despite the financial advantages of buying property at auction, many people are wary of doing so. Not for the faint-hearted, an auction room is an unfamiliar environment for most and is certainly not a conventional way to buy a home. As a result, it is seen by many to be a risky business. This is not actually the case, says Andrew Entwhistle, associate partner of surveyors and valuers George F White, which has offices in Alnwick and Wolsingham and holds between 10 and 15 property auctions across the region every year. "There are two golden rules for buying at auction," Andrew says. "The first is to do your homework and get an answer to every question you have before the auction. This may cost you, but it will be cash well spent. "The second is to go to the auction with a fixed price in your head and to stick to it. If you follow those rules, buying at auction need be no more risky than going through an estate agent." While George F White usually deals in properties with what Andrew describes as the "wow factor," and buyers who pay in cash, he says in general there can be bargains for the taking at auctions. "A lot depends on who is there on the day bidding, and how the property has been marketed. If it hasn't been marketed well or the seller wants to get rid of it quickly, then there is a possibility you will get a bargain. "In the current elevated housing market, auctions are preferred by many. It is a transparent way to buy. You have the advantage of being able to inspect all the deeds, searches and contracts beforehand." Richard Francis, head of auctions at estate agent Keith Pattinson, says: "Every month it staggers me that, while some properties go for more than anticipated, many go for much less. "We are attracting first time buyers and those looking to trade-up as well as investors, and have properties across all price ranges, from £1,000 to £750,000." Andrew Entwhistle throws cold water on the idea that an auctioneer may mistake a twitch or a cough for a bid. "A property auction is not like a lamb sale where a sneeze will buy you a whole flock. At a property auction you generally have to wave your arms around very strongly. However, my advice would be if you're not wanting to bid, keep your arms folded." A more common problem is bidding for the wrong lot. Make sure you know exactly which lot you want and which lot the auctioneer is taking bids on. You should also check that the property is still up for auction and hasn't been sold privately. So while buying at auction can be nerve-wracking, it need be no more risky than buying through an estate agent. The only difference is that the selling price will be determined by the amount of competition bidders are prepared to offer. Most people who buy at auction are cash buyers who already have finance available. But some inexperienced buyers do venture into the auction market. If you decide to do so, then you must be certain that your finance is in place before making an offer. The auction catalogues are released usually two to four weeks before the sale and give a guide to prices, so you will know roughly how much you will need. But remember that the final price may be higher, particularly if there are several bidders for the property. The most important point to remember about this pre-auction planning is that all of the paperwork, surveys, searches, and financing must be carried out before the auction itself. But one of the major advantages is that the purchase goes through very quickly, therefore you bypass problems like chains or a long wait while the vendor finds a suitable property to move to. Five good reasons to buy a property now By Nic Cicutti, MSN Money special correspondent House prices might be reaching their peak but if you want to get into the house buying market now may still be the ideal time Suddenly, like the first falling leaf at the end of a long summer, a few tremors are being felt in the housing market. Surveys appear to show that property prices, for so long a one-way bet, are beginning to stall. In a few areas, it is being whispered, they are even falling. The very horror of it! What on earth will we talk about at dinner parties now? The practical consequence of scare stories is that, understandably, they are likely to put some people off buying their own homes. They will opt to rent instead. Switching to renting a home may not be wise Indeed, some existing homeowners are actively discussing the possibility of selling up, renting for a year or two and then buying back into the market again when prices have fallen. Now, I’'m all for personal freedom of choice in these matters. If you want to incur costs of up to 3% when selling your home, plus many thousands more - including stamp duty of up to 4% - to buy one back, be my guest. You are obviously gambling on prices falling by at least 10%, probably nearer 20%, in very quick order. But as far as I’'m concerned, people should keep buying. Not if you can’'t afford to, of course: in that case you ought to rent instead. My own rough guideline is that you should never be paying more than 35% of your monthly take-home income on a mortgage –- and you should also factor in the potential cost to you of mortgage rates moving up by 2% in your affordability calculations. But if you CAN afford to buy and are wondering whether you should bother, here are five good reasons you should take the plunge. 1) Property is NOT an investment In the past few years we have become used to the idea that property is an asset, in exactly the same way as the shares we hold in our pension fund or an ISA are assets. That's simply not true. And here's why: You mainly buy a property because, at the end of the day, it
provides a roof over your head. Whether it goes up or down in
price should not really matter to you. As long as you like it,
you can make the repayments and want to live in that area, nothing
else really matters. 2) Property IS a good long-term investment Confused? Allow me to explain. Even though a home SHOULD be treated primarily as a shelter and not an investment, no-one likes to buy a property, or anything else for that matter, only to discover that it is worth far less than they paid for it only a couple of years before. Oddly enough, this feeling doesn’'t stop people splashing out on a brand new car - despite knowing that the minute it gets driven off a garage forecourt it will lose up to 35% of its purchase price. But in the case of our homes, it is still nice to feel validated by the right choice, particularly as it is the largest financial purchase most of us are likely to make in our lifetimes. In fact, evidence suggests that while property doesn’'t perform as well as shares over the long term, it does generally retain its value over the years. The Halifax has been publishing its survey of house prices since 1983. Back then, the average UK property cost just under £30,000. Today, it is worth just under £160,000. You can download an excel file of this data from the www.hbosplc.com website Nationwide’'s survey, which dates back to 1952, shows a similar set of figures. By the way, the average price of a property back then was £1,891 - and the average wage stood at £489. You can download an excel of this data from the www.nationwide.co.uk website Have prices kept pace with inflation over this period? Nationwide’'s survey uses 1957 as its starting point and looks at what you could have bought with the money used to buy a house back then. Moving forward 47 years, prices have outstripped inflation five times over. You can download an excel file of this data from the www.nationwide.co.uk website Equally, there have been long periods when, despite the fact that prices were rising, inflation eroded a significant part of those increases. The trick with property is not to focus on the short-term but look ahead at least 25 to 30 years - roughly the amount of time it takes most of us to pay off our mortgage! By the way, although changes in the property market happen with the speed of a huge tanker turning in the Channel, certainly when compared with shares, what is also true is that the recovery of prices in the mid-1990s was fairly rapid. Up to mid-1994 they were still falling. But in the period between September 1994 and June 1995, they rose 8%. Miss out on that and you would regret it. 3) Negative equity is nothing to worry about Every story about the last property market collapse focuses on what happened between 1989 and 1995, when prices collapsed. Millions of people found themselves paying off mortgages that were greater than the value of the homes they were living in. In some cases, the disparity was upwards of 30% and I personally know a couple whose flat plummeted by 50% in value over that period. At the same time, hundreds of thousands of people had their homes repossessed. They were unable to pay their mortgages and, in many cases, would symbolically march into their lenders’' offices, hand over the front door keys and walk out again. For them, the early 1990s were a miserable period. But there is a danger of confusing things here: it was not negative equity that led to repossessions but a sharp economic downturn during which unemployment rocketed, coupled with high inflation, when interest rates shot up to 15% at one point. For those who were able to continue paying off their home loans, negative equity was an unfortunate fact of life, but changed little: they were still able to live in the homes they had bought. The major problems were faced by those who, mainly for work reasons but also in cases where couples split up, found themselves wanting to move but were unable to do so. Lenders reacted by launching mortgage products on the market that allowed borrowers keen to move to do so. Of course, a significant effect of negative equity was that there were pockets where prices fell more dramatically. This was either because they had bought “starter” homes (little better than bedsits) that no-one wanted, or because they lived in parts of the country that were badly affected by worsening economic conditions. But for the rest of us –- I was there too - if our £50,000 homes dropped in value to £40,000, the chances were that the one we were hoping to step up to had dropped by a similar percentage. So moving was not impossible, just a lot more difficult. 4) Demographics are on your side Prices of residential property are partly fuelled by mass psychology, as we know. It is easy, when prices are booming, for individuals to make "rash" decisions, paying higher and higher prices because they think that unless they do, they will have to pay even more, further down the line. But there is also a fundamental shortage of residential property in the UK, which few experts believe is likely to be resolved in the next decade or so. If anything, it could get worse. The recent Barker Review of the UK property market, carried out on behalf of the Treasury, makes the point clearly: In 2002,
the last year for which figures are available, around 183,000
houses were built in the UK, 138,000 of which in England. Taking
into account of demolitions and conversions, the net number
of new homes was 134,000, a 0.6% increase in the UK’'s
housing stock. This is more or less in line with homebuilding
trends in recent years. For more information on the Barker report go to the www.hm-treasury.gov.uk website The Council of Mortgage Lenders, which has also researched the issue, suggests: By 2021 there are projected to be 2.1 million more married people
in England, counterbalanced by 5 million more single adults and
a further 1.5 million divorced. If, as has been happening, the multiple of income to property prices rises from 3.5 to nearer 5 times earnings, many people will not be forming households: they will live at home or in rented accommodation. However, that suggests prices are more likely to remain static for some time, rather than fall. 5) You can be your own master (or mistress) Think about it: the chances are that if you live in rented accommodation, you have surrendered any decision about how the place should look to your landlord. Because he or she is after an easy life, you probably have a nice white or beige colour scheme, with decently ordinary sofas and armchairs, a reasonably comfortable bed and appliances that work, for the most part. Deep down, you yearn for something uniquely yours, where you can express your own personality rather than suffer someone else’'s commercially-determined blandness. You want lime-green walls with cerise curtains, rubber flooring and, yes, a genuine avocado colour bathroom suite. Oh, and don’'t forget the parachute, dyed black and strategically hanging, fully open, over your water bed. If you rent, you will never really be able to decide how you live. If you buy your own property, you will never have to put up with someone else‘'s good taste again. Which is why I repeat: as long as you can afford it, you should consider buying regardless of the doomsayers who warn that property prices are set to collapse. They are probably wrong. But even if they are, you will be having a lot more fun waiting for the market to turn than them.
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