Good deal on repossessed property at auction by Lawrenson of LettingFocus
Years ago, buying property at auctions was the preserve of a few professional investors and builders. However, more and more people (and financial institutions) are now both buying and selling property at auction, so that today the volumes sold are approximately three and half times what they were 10 years ago.
Around one eighth of all residential property sold at auction is now a repossession and about one eighth of all repossessed property eventually finds its way to the auction house.
But can you bag a bargain at an auction and what do you need to know?
Well, the first thing to remember is that the auctioneer’s client is the vendor, not you. In this much he is just like an estate agent whose duty is to get the best (read highest price) for the client.
However, whereas some estate agents will often let slip information on what price the vendor will accept, you are not likely to get any such tips from an auctioneer.
Remember too, that you will be in a room competing with other buyers and the auctioneer will be doing all he can to squeeze out an extra five hundred pound from the bidders.
Repossesions Are On the Up
All auctions are seeing a big rise in repossessed flats which were bought off plan by would be investors.
Many of these investors bought the flats with rental guarantees from builders or via property clubs, often on 2 or 3 years fixed rate mortgages taken out in 2004 or 2005.
With the rental guarantee ended these landlords were left competing with hundreds of others for a limited tenant pool. They were also facing having to remortgage at higher borrowing costs.
As an example, at a recent auction, a two bedroom flat in SE London, which had sold at £250,000 in 2005 was put on at a reserve price of £175,000 but still failed to sell.
Check with Estate Agents First
Most repossessions will be marketed at estate agents first and only then come to auctions, so it’s always worth keeping in with the agents who handle repos (not all do) to see what’s coming up there first.
So, there are always good deals on offer especially on these oversupplied me too city centre flat. However, with the dearth of tenant demand, you have to ask if they will ever be a good investment.
At auction, you and your conveyancer will have had to study the legal pack, do your viewings and survey, arrange the finance and insurance in principle before the fall of the gavel.
You’ll also have to pay 10% of the purchase price right there at auction and you must also normally complete within 28 days though a seller may allow you longer. You will also have to pay the auctioneer’s fees - usually 2.5% plus the stamp duty.
Ten Tips for Success at Auction
Go to a few auctions first before you bid. Understand how it works and feel comfortable.
Ask for the package compiled by the auctioneer at least 4 weeks before the auction. Get your conveyancer to study it carefully. Look at the contract, the title documentation, the searches, whether there is any outstanding planning or environment issues etc and replies to general enquiries.
On the day of the auction, arrive early; check the “addendum” and the legal pack in case anything like special conditions have been added.
Keep cool and stick to your maximum price.
If you go with a partner, sit together as it’s been known for partners sitting in different corners to bid against each other! B
The auctioneer, vendor or their agent can bid up to the reserve price without identifying themselves. It’s called “off the wall” or “imaginary” bidding.
If the sales details quote “unless previously sold” you should be able to approach the auction house and make a bid in advance of the auction. If it’s accepted, you’ll still need to move fast and ensure finance is ready and conveyancing can be done quickly.
If the property hasn’t met its reserve, the auctioneer will normally tell you what the reserve is and advise if he has the vendor’s authority to sell at the reserve price for up to 24 hours after the auction. This can be a good way of snaffling bargains.
Forthcoming auctions are advertised in local newspapers, as well as on the Internet or in the Estates Gazzette magazine.
Get real! Don’t come expecting to buy a £300,000 place for £150,000. However, you may well bag one for £270000 or even a shade less.
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
We are LettingFocus.com - the property investment experts.
I’m, David Lawrenson, the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property book.
What’s unique about LettingFocus is that I offer independent unbiasedproperty networking seminars covering property investment and letting because unlike most people in the buy to let and property “advice” business I am not linked to a property company, developer, agent or bridging loan financier.
I can tell you where to buy (which areas), what type of property to buy, when to buy, how to buy property at a low price, how to make sure you get tenants who are going to pay the rent and how to manage a rental property to make money.
I can also comment on “No Money Down” Schemes and “Buying Below Market Value” methods too.I can answer all your questions on letting property because I have been a landlord and property investor for over 25 years.
LINKS
Find out about GREAT DEALS we have arranged for landlords by clicking here: Property Investors’ Affiliate and seeing our Affiliates page.
More products will be added over the coming months. If you are a merchant with national coverage, get in touch!
For SEMINARS click here: Property Seminars, Networking Evenings and Consulting
For the NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors click here:Next Seminar Event
For ONE TO ONE CONSULTANCY help click here: Private One to One Consulting
For TESTIMONIALS from past customers click here: Testimonials
To BUY THE BOOK click here: Buy the Book at Amazon
For THE HOME PAGE OF THIS BLOG click here: Blog
For THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page
For GREAT OFFERS on Products and Services for Landlords, click here: Landlords Resources
To JOIN our Free QUARTERLY NEWSLETTER simply send an email to david@LettingFocus.com - Please note we WILL NOT send spam or sell our mailing list to advertisers!
This blog is updated roughly once a week usually on a Monday or Tuesday.
WANT TO BE KEPT UPDATED WITH OUR LATEST BLOGS?
Over on the right hand side under all the previous blog entries you will see a button which says “Site Feed.” Simply copy the site feed link into your News Reader or News Aggregator.
Please note if you have a website & are thinking of reproducing material here - that’s fine but we DO require a link to the blog to be included, including also all the links in this section.
The full article including all links must be available to ALL VIEWERS of your site and not restricted.To view posts on related topics click on Categories.
WANT TO ADD A COMMENT?
To add a comment to this post, you just click on “link to this post” then simply add your comment.
To view past comments, again and rather oddly (we think), you’ll need to click “link to this post” and view the comments (which will appear at the bottom of the post.)
Copyright: David Lawrenson 2007. This blog is updated at least twice a week. Permission must be sought before using the material in the blog.
Around one eighth of all residential property sold at auction is now a repossession and about one eighth of all repossessed property eventually finds its way to the auction house.
But can you bag a bargain at an auction and what do you need to know?
Well, the first thing to remember is that the auctioneer’s client is the vendor, not you. In this much he is just like an estate agent whose duty is to get the best (read highest price) for the client.
However, whereas some estate agents will often let slip information on what price the vendor will accept, you are not likely to get any such tips from an auctioneer.
Remember too, that you will be in a room competing with other buyers and the auctioneer will be doing all he can to squeeze out an extra five hundred pound from the bidders.
Repossesions Are On the Up
All auctions are seeing a big rise in repossessed flats which were bought off plan by would be investors.
Many of these investors bought the flats with rental guarantees from builders or via property clubs, often on 2 or 3 years fixed rate mortgages taken out in 2004 or 2005.
With the rental guarantee ended these landlords were left competing with hundreds of others for a limited tenant pool. They were also facing having to remortgage at higher borrowing costs.
As an example, at a recent auction, a two bedroom flat in SE London, which had sold at £250,000 in 2005 was put on at a reserve price of £175,000 but still failed to sell.
Check with Estate Agents First
Most repossessions will be marketed at estate agents first and only then come to auctions, so it’s always worth keeping in with the agents who handle repos (not all do) to see what’s coming up there first.
So, there are always good deals on offer especially on these oversupplied me too city centre flat. However, with the dearth of tenant demand, you have to ask if they will ever be a good investment.
At auction, you and your conveyancer will have had to study the legal pack, do your viewings and survey, arrange the finance and insurance in principle before the fall of the gavel.
You’ll also have to pay 10% of the purchase price right there at auction and you must also normally complete within 28 days though a seller may allow you longer. You will also have to pay the auctioneer’s fees - usually 2.5% plus the stamp duty.
Ten Tips for Success at Auction
Go to a few auctions first before you bid. Understand how it works and feel comfortable.
Ask for the package compiled by the auctioneer at least 4 weeks before the auction. Get your conveyancer to study it carefully. Look at the contract, the title documentation, the searches, whether there is any outstanding planning or environment issues etc and replies to general enquiries.
On the day of the auction, arrive early; check the “addendum” and the legal pack in case anything like special conditions have been added.
Keep cool and stick to your maximum price.
If you go with a partner, sit together as it’s been known for partners sitting in different corners to bid against each other! B
The auctioneer, vendor or their agent can bid up to the reserve price without identifying themselves. It’s called “off the wall” or “imaginary” bidding.
If the sales details quote “unless previously sold” you should be able to approach the auction house and make a bid in advance of the auction. If it’s accepted, you’ll still need to move fast and ensure finance is ready and conveyancing can be done quickly.
If the property hasn’t met its reserve, the auctioneer will normally tell you what the reserve is and advise if he has the vendor’s authority to sell at the reserve price for up to 24 hours after the auction. This can be a good way of snaffling bargains.
Forthcoming auctions are advertised in local newspapers, as well as on the Internet or in the Estates Gazzette magazine.
Get real! Don’t come expecting to buy a £300,000 place for £150,000. However, you may well bag one for £270000 or even a shade less.
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
We are LettingFocus.com - the property investment experts.
I’m, David Lawrenson, the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property book.
What’s unique about LettingFocus is that I offer independent unbiasedproperty networking seminars covering property investment and letting because unlike most people in the buy to let and property “advice” business I am not linked to a property company, developer, agent or bridging loan financier.
I can tell you where to buy (which areas), what type of property to buy, when to buy, how to buy property at a low price, how to make sure you get tenants who are going to pay the rent and how to manage a rental property to make money.
I can also comment on “No Money Down” Schemes and “Buying Below Market Value” methods too.I can answer all your questions on letting property because I have been a landlord and property investor for over 25 years.
LINKS
Find out about GREAT DEALS we have arranged for landlords by clicking here: Property Investors’ Affiliate and seeing our Affiliates page.
More products will be added over the coming months. If you are a merchant with national coverage, get in touch!
For SEMINARS click here: Property Seminars, Networking Evenings and Consulting
For the NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors click here:Next Seminar Event
For ONE TO ONE CONSULTANCY help click here: Private One to One Consulting
For TESTIMONIALS from past customers click here: Testimonials
To BUY THE BOOK click here: Buy the Book at Amazon
For THE HOME PAGE OF THIS BLOG click here: Blog
For THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page
For GREAT OFFERS on Products and Services for Landlords, click here: Landlords Resources
To JOIN our Free QUARTERLY NEWSLETTER simply send an email to david@LettingFocus.com - Please note we WILL NOT send spam or sell our mailing list to advertisers!
This blog is updated roughly once a week usually on a Monday or Tuesday.
WANT TO BE KEPT UPDATED WITH OUR LATEST BLOGS?
Over on the right hand side under all the previous blog entries you will see a button which says “Site Feed.” Simply copy the site feed link into your News Reader or News Aggregator.
Please note if you have a website & are thinking of reproducing material here - that’s fine but we DO require a link to the blog to be included, including also all the links in this section.
The full article including all links must be available to ALL VIEWERS of your site and not restricted.To view posts on related topics click on Categories.
WANT TO ADD A COMMENT?
To add a comment to this post, you just click on “link to this post” then simply add your comment.
To view past comments, again and rather oddly (we think), you’ll need to click “link to this post” and view the comments (which will appear at the bottom of the post.)
Copyright: David Lawrenson 2007. This blog is updated at least twice a week. Permission must be sought before using the material in the blog.
Labels: Auctions, Below market value property, BMV, buying property at auction, buying property cheaply, property auctions, reposessions, repossessed property
This entry was posted by lettingfocus, on
Saturday, December 29, 2007.
