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Help please - what to set as limit at auction?
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Thanks zagubbov - interesting psychology and worth a try :beer:
Thanks getmore4less - it does indeed say under offer but when I spoke to the EA this morning and they seemed surprised at first, then were less than convincing when confirming it was under offer with the usual 'unable to divulge' excuse before suggesting we put in our offer asap to avoid missing out.
We'll take some time to think out our strategy and possibly wait until next week after the auction :money:
The service charge is about £2400/yr :eek: but from comparison to other flats in London actually seems quite good value! It's all relative I suppose :rotfl:
Thanks Doozergirl - Theres's lots of development around Elephant&Castle but all the newer flats are much more expensive (£400000+ for studios with part ownership schemes and help to buy incentives etc.). We're not Londoners but this area doesn't seem much worse than other parts of London we've seen (Battersea, Islington) and much nicer than some (Whitechapel, Camberwell).
Thanks Cakeguts - From what we've been told the auction sale was due to the owners moving abroad and needing a quick sale. I believe these flats are mortgageable and many owners have mortgages (from speaking to one of the reception desk concierges). Multiple other flats in the complex are for sale by the normal Estate Agent way so presumably must be mortgageable?
This is a recent development since the tragedy of Grenfell Tower.
I'm not an expert on this but it isn't to be underplayed. I believe that many blocks need to be or should have been to see if they are at a high risk.
Needless to say, mortgage companies are VERY interested in these results and despite people already having mortgages, lenders can and will change their criteria at the drop of a hat to avoid risk. They won't take mortgages away from people, but they are always at liberty to refuse to lend.
We've had questions raised by buyers on this board (through regular estate agents) where mortgage companies are requesting these reports as a condition of lending.
Random article about testing:
https://www.google.co.uk/amp/s/amp.theguardian.com/uk-news/2019/jan/22/tower-block-residents-face-uncertainty-as-new-tests-of-materials-launched
You might need to do a little more research on London if you're putting the Elephant on a parr with Battersea and Islington. There's gentrification and then there's gentrification.
After thinking it all through (and a weekend of binge watching Homes under the Hammer
Our information on the current market:
4 studio flats on the market currently in Metro Central Heights.
Flat A - STC advertised at £300000 - very good condition from the photos
Flat B - STC originally advertised at £295000 then reduced to £290000 after a month - reasonable condition based on photos
Flat C - possibly under offer advertised at £280000 - reasonable condition but could do with cosmetic internal decoration/new kitchen+bathroom based on our inspection
Flat D - at auction guide £200000 and probably reserve £220000 - liveable condition but really needs a new kitchen/bathroom and internal decoration.
Flat D is the best located in the complex as it is on the second floor and facing into the quiet courtyard where the others are either much higher or facing out onto railway lines or busy road so noisier.
All external / structural conditions are essentially the same as in the same complex block and same age as are service charges etc.
The last studio sold in Jan 2019 for £275000 and was in reasonable condition based on photos but overlooking the railway line.
Rental income for studio flats is about 1200-1400/mth
Overall property market in London is stagnant/falling possibly due to Brexit uncertainty.
Auction day
We feel potential buyers at the auction will be either professionals looking to flip or add to their rental portfolio or private owner occupiers like us
Flat D's reserve is very low at £220000 as if done up to a reasonable standard (likely cost (<£5000) it should be worth £270000 on the open market. For this property the auction fees+costs will amount to about £3500 with the usual solicitor fees stamp duty on top of that.
If sold for the reserve a buy to let investor renting at market rates would have only a 6% gross return so not really a viable purchase even at reserve.
Property flippers could do a lot better if sold at reserve and redecorated with up to £40000 pre tax profit. These buyers could make a reasonable profit (>£10000) up to about £250000 when the increased stamp duty starts to bite more significantly.
We've based our maximum on this information but appreciate there may be professional buyers with better information or other irrational individuals or private buyers who really want this flat (I understand a lot of people rent initially then look to buy in the complex as they like living there). There are unlikely to be many such flats at future auctions as they normally sell via Estate Agents but these sellers are moving abroad so want to sell quickly but we definitely don't want to pay more than the open market value after auction costs are included.
We're not absolutely desperate to buy this particular flat so will not go over our maximum and hopefully will enjoy the auction experience :money: