Why cash is king for buy­ers hunt­ing the bar­gains

Would be owner-oc­cu­piers are thin on the ground at north­ern auc­tions, which mean rich pick­ings for cash buy­ers. Sharon Dale re­ports.

Yorkshire Post - Property - - PROPERTY -

NEWS that owner-oc­cu­piers are out­bid­ding in­vestors at prop­erty auc­tions barely raised an eye­brow among those who bring down the gavel in Lon­don and the South East.

But for York­shire auc­tion­eer Tony Web­ber, of Leeds-based Ed­dis­ons, it came as a sur­prise and pro­vided yet more ev­i­dence of a north-south di­vide.

“It is def­i­nitely a dif­fer­ent story up here. In fact we are see­ing fewer owner-oc­cu­piers. It’s nearly all in­vestors and they are not us­ing bank money, they’re us­ing their own from sav­ings or pen­sion funds,” he says.

At auc­tion, cash is king and in Lon­don there are many more wealthy buy­ers who aren’t reliant on a mort­gage.

“In the boom when banks were lend­ing freely you could get a mort­gage quickly and eas­ily and come to auc­tion. That is very dif­fi­cult now be­cause of the time frame. It only takes about three weeks from list­ing to sale and when the ham­mer comes down it’s a legally-bind­ing con­tract. You have to pay,” says Tony.

The would-be owner oc­cu­piers who do bid of­ten bor­row from the bank of mum and dad and pay the loan back later af­ter se­cur­ing a mort­gage.

There are cer­tainly bar­gains to be had for the for­tu­nate few able to house hunt in the auc­tion cat­a­logues, but they have to look hard to find their dream home.

“It is mostly dis­tressed prop­erty. We don’t tend to sell beau­ti­ful houses in nice ar­eas at auc­tion We leave that to es­tate agents,” says Tony.

“Prop­erty comes to auc­tion through re­ceiver­ships, re­pos­ses­sions and de­ceased es­tates, where there’s a will to sell as quickly as pos­si­ble. We also get lo­cal author­ity and wa­ter com­pany prop­er­ties.”

In Ed­dis­ons next auc­tion on July 26, there is a three-bed­room, canal side mews house in need of mod­erni­sa­tion in Sandbeds, in Keigh­ley with a guide price of £120,000-£140,000 and for first timers, a ter­raced house in need of re­fur­bish­ment on Kitch­ener Street, Selby, with a guide price of £45,000-plus.

The guide price tends to be close to the re­serve, which is usu­ally be­tween 20 and 25 per cent cheaper than sim­i­lar prop­erty for sale through es­tate agents.

Those look­ing now will find that the July and Au­gust cat­a­logues are slim due to the sum­mer lull. Septem­ber on­wards should of­fer richer pick­ings for those who have cash and are pre­pared for a project.

Any­one who watches Homes Un­der the Ham­mer will know that al­most ev­ery­thing at auc­tion re­quires ei­ther mod­erni­sa­tion or full-scale ren­o­va­tion.

“Homes Un­der the Ham­mer has cre­ated a lot of in­ter­est in prop­erty auc­tions but the re­al­ity is that there aren’t that many peo­ple out there with fluid cash in a po­si­tion to bid,” says Tony.

“That means it is a great time to buy for those who are in that for­tu­nate po­si­tion.”

Ed­dis­ons next auc­tion is on July 26 at Leeds United Football Club, El­land Road. www. ed­dis­ons.com

Buy­ing at auc­tion tips:

For de­tails of auc­tions in your area, contact lo­cal prop­erty auc­tion­eers and check their web­sites for cat­a­logue list­ings. Some banks send all their re­pos­sessed prop­erty to Lon­don auc­tions, which is where the Es­sen­tial In­for­ma­tion Group web­site is use­ful. A site used by in­vestors, www.eigroup.co.uk lists most UK auc­tions and you can reg­is­ter for alerts on prop­er­ties in your search area. It costs £450 plus VAT for a year and £250 plus VAT for six months.

If a prop­erty looks like a bar­gain there will be a rea­son so in­spect it your­self be­fore the auc­tion and, if pos­si­ble, have a sur­vey. The cost could be £500 but at least you will know what you are buy­ing. Once you know you can ask a builder how much the work might cost.

View­ing in per­son will also put the prop­erty in con­text. It could be next to a py­lon or a dual car­riage­way.

Check the guide price against the po­ten­tial re-sale value of homes in that area. Ask a lo­cal es­tate agent. You can check on what homes have sold for in the area re­cently on “sold house prices” on www.zoopla.co.uk

Check the le­gal doc­u­ments and con­di­tions of sale, which the auc­tion­eers will have.

You may want to en­gage a lawyer to look through the le­gal pack to check for covenants or re­stric­tions.

The fall of the ham­mer at the fi­nal ac­cept­able bid con­sti­tutes a bind­ing con­tract and the pur­chaser is re­quired to pay 10 per cent of the pur­chase price, cheques be­ing made payable to the ven­dor’s solic­i­tors.

Com­ple­tion of the sale and pay­ment of the bal­ance takes place four weeks later un­less the con­di­tions of sale pro­vide oth­er­wise.

You’ll also need to or­gan­ise in­sur­ance as you be­come li­able for any dam­age to the prop­erty as soon as your bid is ac­cepted.

Work out the max­i­mum you’re pre­pared to pay and stick to your bud­get. It is easy to get car­ried away in an auc­tion en­vi­ron­ment, es­pe­cially if you have a com­pet­i­tive na­ture. or that po­ten­tial bar­gain could be­come an ex­pen­sive mis­take.

RE­GENCY GEM: North­gate House has eight bed­rooms and a se­cluded po­si­tion the sought-af­ter vil­lage of Hon­ley.

FIRST TIME BAR­GAIN: This house on Kitch­ener Street, Selby, is up for auc­tion with Ed­dis­ons, with a guide price of £45,000.

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