Wednesday, June 11, 2008
1. Property auctions are held around the country, but are advertised only about four weeks before. Look in local and national newspapers or in the trade papers Estates Gazette and Property Week. Chris Coleman-Smith, the head of auctions at Savills, recommends the Essential Information Group site, eigroup.co.uk, where the sales of all 300 auctioneers in the UK are listed. He says: “Sod's law says that if you get six catalogues, the property you would really like is in the seventh.”
Don't stay local
2. David Sandeman, of the Essential Information Group, says that the best bargains can often be found when properties are auctioned outside their local area. He says: “Half the properties sold in sales in London are outside the city. And if you have a small auction house in Wiltshire selling a property in Manchester, you may not have many people bidding who know the area.”
Get a professional view
3. The auction catalogue - which you can get, often for a small fee, direct from the auctioneer - contains all the information regarding the sale, such as guide prices, viewing times and any special conditions of sale. But make sure you appoint a solicitor who will apply for and check the document pack relating to your lot. This typically costs about £25 and includes the searches and the home information pack but no in-depth survey or valuation. Coleman-Smith says you can sometimes unearth important extra information by contacting the management company or speaking to another leaseholder.
See what you are getting
4. Visit the property at one of the viewing times listed in the catalogue - and take with you a surveyor and/or builder as necessary. More experienced buyers who feel they do not need a full survey sometimes pay a reduced fee of £100 or so to these professionals to “walk through” and advise on the property. According to Coleman-Smith: “You don't want to pay £500 for a full survey, just to be told there is a bit of woodworm under the stairs.” Viewings are typically scheduled twice a week and are open to everyone, which makes them an ideal chance to check out the rivals for the property you are interested in, according to Gary Murphy, the head of auctions at Allsop.
Keep an eye on the price
5. Do remember that a guide price (which to amateurs can appear very low) is, as Coleman-Smith says, “closer to a reserve price, and may have no relationship at all to the final sales price”. A guide price can change according to the interest displayed by buyers and any offers received in the run-up to the sale. It is not always advisable to make an offer before the sale as this may push up the reserve price, but be guided by the auctioneer. Coleman-Smith suggests expressing interest in writing and asking to be informed if a property is about to sell before the auction.
Find the cash
6. Have all your finance in place before you bid - if you are successful you will be expected to pay a 10 per cent deposit on the day, which you will forfeit if you can't find the remaining 90 per cent by completion 28 days later. However, more and more sales, particularly of repossessed homes, specify completion within 14 days, Sandeman says. Your lender must be aware of - and be able to meet - the strict auction deadlines by giving you an offer of mortgage before the sale. If you can't get this in time, don't bid.
Concentrate
7. Auctions last only about three minutes per lot. Once the hammer falls in your favour you will be required to sign the contract of sale in the back of the catalogue, and pay the deposit, so make sure you know your limits - and are bidding on the right lot. If you are a novice, consider attending a sale or two as a trial run before bidding.
Bid...
8. Auctions are not for the fainthearted. If you are worried about getting carried away, take your solicitor or a friend to bid on your behalf. You can also, if you think it is better for you, bid by telephone or online. But make sure you are fully informed: pay special attention to the auctioneer's announcements at the beginning of the auction as he or she will explain the procedure and disclose any lots sold or withdrawn prior to the sale. You must also read the addendum sheet on the day, which reveals any errors or omissions in the catalogue.
...or choose not to bid
9. David Sandeman says: “Do not get emotionally attached to a property. You are buying an asset, and if you miss this one, another will come along.” Some experts say that it is not advisable to start the bidding, as this can push up the price. If the auctioneer does not get the opening bid he calls for, he may accept a lower one. But Gary Murphy advises that sometimes a bold, early bid can be successful. He says: “Your competition will sense your strength and may be spooked.”
Follow up on unsold lots
10. Look into post-auction sales. Sandeman says: “Forty per cent of properties at auction do not sell. The sellers are then on the back foot: they have not managed to sell before the auction or during it, and you may be able to negotiate a bargain. More and more properties are coming to sale, and more and more are not being sold.”
