first time buyer - property - is AUCTION the answer?

Sandy_Walton

Hiya,

The boom in property prices makes it very difficult for some of us to get on to the property ladder. PROPERTY AUCTIONS can that be the answer for us? :search:

Ian_W

Hi Sandy,
Interesting first post. Auction properties tend to be problematic in one way or another. For example they may be neglected, need serious structural work, be unmortgageable etc, etc. The buying process is also more than a little fraught with a 10% deposit and exchange on the day of the auction with completion usually required within 28 days or less sometimes. Hardly the kind of scenario that fits easily with a FTB making the biggest decision and financial outlay of their life to date.

Sometimes there are genuine bargains at auctions, often properties sell for more than they're really worth. Very high risk IMO unless you can get teamed up with someone who really knows the ropes.

Sandy_Walton

Ian_W wrote:

Hi Sandy,
Interesting first post. Auction properties tend to be problematic in one way or another. For example they may be neglected, need serious structural work, be unmortgageable etc, etc. The buying process is also more than a little fraught with a 10% deposit and exchange on the day of the auction with completion usually required within 28 days or less sometimes. Hardly the kind of scenario that fits easily with a FTB making the biggest decision and financial outlay of their life to date.

Sometimes there are genuine bargains at auctions, often properties sell for more than they're really worth. Very high risk IMO unless you can get teamed up with someone who really knows the ropes.

Many thanks for that - makes sense - it's probably a very well researched exercise that could bring in some results! I feel that's my only chance - I want to find out my maximum borrowings (which isn't a lot anyways) & then try my luck at the Auctions - if I get anything well within my budget - good - or else keep trying............... not sure for how long I could do that but what's the EXPERT's opinion on this - worth the try or is the AUCTIONS market also taken by the big fishes - PROPERTY DEVELOPERS???

Ian_W

I wouldn't claim to be an EXPERT on anything, Sandy. One of the big turn-off for auction property and FTBers is the fact it's binding opn the day and your costs are very high if you don't subsequently go through with the purchase. If you spot a prop you like going to auction, view it and still like it do you have a survey done at a cost of several hundred pounds when you may be outbid on it? You could take the risk that the only problems are those you can see or you could end up spending a lot on surveys for props you don't buy. If you don't have a survey how do you get the mortgage funds available for a very quick completion? As a FTB are you going to have a 10% cash deposit available?
Do research it thoroughly and make your own mind up. It might help if you have a family member/ very trusted friend who is a builder who can give you a good idea of problems if you buy.

dander

The other thing to beware of with auctions is what the actual selling prices are as opposed to guide prices. Good property tends to go for its market price, even at auction. That's often well above the guide price you see in the brochure.

Sandy_Walton

Thanx For That.
About Auctions - What's The Best Possible Way To Find When & Where They Take Place? I Always Hear About Someone Finding A Great Bargain - But By Then It's Too Late...................
Would Love To Hear From Someone Who Has Had Some Luck With This...........

lynzpower

Sandy,
The other thing to note is that a LOT of mortgages will not allow you to buy auction properties. Check with an all-of-market broker to find out which ones are.

I was a ftb not that long ago and I believe that auctions are thoroughly problematic. At the very least, most properties will need new kitchen/ bathroom/ carpets from the word go, do you have the money for this in savings.

I watched a homes under the hammer not long ago and saw a bloke buy a fairly poky flat in somewhere like Newquay/ Torquay for about 140k. Yes it didnt need much work doing, but I didnt think it was the bargain that everyone says at auction. I thnk the BBC website has homes under the hammer page which may have links to auctions in your area if you are convinced this is the way to proceed.

Sandy_Walton

This morning I was listening to a "Millionaire's" interview on the radio - from the latest millionaire's list - how he made his first - the most difficult million. Well he said "property business" & just what we have been talking about - buying old/run down properties - do them up & of course sell it for a profit - & he did mention Auctions was one way for him to get started (that definitely was highlighted) & he hasn't stopped since.
Well I think it is true when they say you need money to make more money, hence difficult for some of us just to get on to the property ladder (not for selling purposes but for living in it) phew!

meanmachine_2

Yes, but Sandy this guy probably had some money from daddy to set him up in the first place - in this case as a property developer.

as others have said, I wouldn't recommend this route for a FTBer, and particularly not during a fairly brisk economic period.

Bargains could have been had during the recession of the early 90s, but then, that's because fewer people had jobs, there was less money about, less demand for property, more repo's etc etc

The best advice is the most boring - live as cheaply as you can for a few years, build your career, build your deposit and buy when you think property is reasonably priced again (if that ever happens).

rizla01

Hi,

Not many bargains out there at the mo and unlikely to be in the near future.

I always go on the unsteady premise that if enough people are bidding then it is PROBABLY an O.K. prop but not always the case, hence the risk factor.

I have never bought at auction without scrutenising the building inside & out.

some auctions don't get the 'turnout' for one reason or another and therefore sometimes nice props go 'Under the hammer' without a lot of interest.

You really do need to know your market but a safe bet is do as I ALWAYS do. - Go for a propeerty that will either increase in value at little cost or buy one with a good selling feature like position, garden, parking etc.

It's surprising how many properties that I have seen sold at auction with HUGE cracks etc which go back on the market with an EA having just had the cracks filled and sanded. AND reach a lot more than they sold for. Often a good clean up will get another 5k added onto it's value.

Being a FTB is it possible for you to go halves with someone else and share the work/risk/profit?

Sandy_Walton

It's me & my partner, but he works as a freelancer in media - which just hasn't helped the cause. Both salaries put together just about make the national average wage slab - not enough to get a decent mortgage.

We even looked at "Park homes", but weren't very impressed............... leaves a lot to be desired.

.............am still exploring my options, don't want to give up that easy..................