Buying a House at Auction is a Breeze - just don't scratch your ear

A residential auction conducted by Allsop CREDIT: JEFF GILBERT

Buying a house at auction would strike most people as rather odd. They would cheerfully buy a used sofa off a complete stranger on eBay, but a used property? No way!

But tens of thousands of buyers would disagree. At the auction I am attending in London, conducted by Allsop, the market leader, the bidding is hectic.

It is standing room only at the back, and everything happens so fast it is hard to keep up.

“…£500,000… £510, 000… Who will bid me £520,000? Thank you, sir. Just one more, madam? Is that a nod? It’s a nod. £525,000… Will anyone go to £530,000? Are you sure, sir? No? Going once… Going twice… SOLD to the lady in the striped shirt…”

The setting may be grand – the Cumberland Hotel in central London – but the tone of proceedings is low‑key and business brisk. If the sums involved were not so big, this could be an auction of antique furniture or a second-hand car sale.



Gary Murphy, the auctioneer, sets a cracking pace. Auctioneering runs in the family as his father and grandfather were auctioneers; he could be selling heifers at a country fair in Ireland.

What was that? That was a bungalow in Hove, snapped up for £292,500. Bang! Another one goes under the hammer, this time a flat in Maida Vale. The guide price is £450,000, but after a three-way tussle between Man in Dark Raincoat, Man in Grey Sweater and Lady with Rolled-up Newspaper, the flat goes for £765,000.

By midday we are on to Lot 34, but with more than 200 lots still to go, it is going to be a long day for Murphy and his team. At the last Allsop auction, in February, 283 lots were sold, totalling £74.8 million, and up 37 per cent on the same time last year.

The real eye-opener is the variety of lots on offer at the same auction – everything from £20,000 flats in Skegness to a flash Knightsbridge apartment which eventually fetches £3.3 million. The number of high value properties being auctioned has more than doubled in the past year.

There are telephone and online buyers, and some people who have just wandered in off the street – who are told off for scratching their ears during the bidding.

The vendors listed in the catalogue are an equally eclectic lot, everything from property speculators to housing associations to charities.

Rather than dealing with estate agents, buyers come to auction because they have bought into the idea that it is a good place to seal a property deal. Auctions aren’t necessarily cheaper than going through an estate agent, but act as a treasure trove of investment properties that, with renovation, could yield great returns.

Andrew Leslau, whose company has a portfolio of properties in the North East, has several lots listed in the catalogue. “We do not exclusively buy and sell at auction, but we find auctions a good vehicle for getting a fair price quickly,” he says.

It is the speed and certainty of the auction process that attracts Leslau and other institutional vendors. As soon as the hammer falls, the purchaser has to put down a 10 per cent deposit.

There is no risk of long property chains or offers being withdrawn weeks after they have been accepted. Buyers must do due diligence before they make their bid.

A common misconception about property auctions is that they are only attended by old hands who know the ropes. Not so, apparently. Gary Murphy reckons that, at a typical Allsop auction, 30 per cent of those attending will be newbies, testing the water, seeing if they can get a deal.

But only quite a small minority of British home-owners choose to buy or sell properties at auction.

HOUSE AUCTIONS

How to buy

Top tips from Gary Murphy, auctioneer at Allsop

Shop around first - Most auctioneers will also list their lots on the main property portals such as Rightmove and Zoopla. Essential Information Group covers almost every auction held in the country.

Check out the property itself - It may seem crazy, but many professionals buy without viewing first. That’s not a good idea. It’s “buyer beware”. Instruct a surveyor to take a look at the building and report to you. A lot of property that goes under the hammer needs work.

Instruct a solicitor to make legal inquiries and arrange your finance before bidding - Never bid at auction unless you have the money to pay the deposit (10 per cent) and any buyer’s fee on the day. Completion of your purchase will usually be within one month. By that time, you will need to have the balance of the purchase price ready to go.

Set yourself a price limit and make sure you stick to it - This is harder than it sounds. In the heat of the moment – and with a skilled auctioneer working the bidding – you could easily get carried away.

Stay alert - Things happen very quickly; bid clearly so that the auctioneer doesn’t miss you. But don’t worry – despite all the tales, he won’t sell you a house if you scratch your nose. Always remember that the fall of the auctioneer’s hammer is the point at which the sale becomes legally binding. After that, there’s no turning back.

In 2015, there were 1,227,770 residential property transactions in the UK, but only 20,845 residential properties sold at auction – just 1.7 per cent of the total. Compare that with Melbourne, Australia, where selling property at auction is far more popular and can account for up to 30 per cent of total sales.

In the past two months, there has been a20 per cent rise in lots coming to auction, fuelled by the deadline of April 1, when stamp duty for buy-to-let landlords increases by 3 per cent. Savills has scheduled a second February auction, such was the demand at the previous one.

The previously murky world of auctions has been opened up thanks to the efforts of David Sandeman, whose Essential Information Group website is positively encyclopaedic. “Thirty years ago, I used to buy and sell properties at auction and got frustrated by the lack of transparency in the process,” says Sandeman.

“Ever since then, I have been on a one-man mission to disseminate the kind of information that is helpful to buyers and sellers alike.”

Property auctions may not be quite in the mainstream yet, but they do make for excellent people watching.

Allsop’s next auction is March 29 & 30

Sourced- Telegraph