Could you pick up a property bargain at auction?
October 16, 2008
As most people are only too well aware the prospect of being able to afford a property these days is very bleak, even thought property prices are falling, as they have been for the past eleven months. Whilst house prices have been falling month on month, the cost of buying a property is still very high. On top of this the ability to get a mortgage for such a substantial amount of money has become increasingly restricted, with lenders exercising far more stringency because of the effect of the global credit crunch.
As a result of the effects of the global credit crunch, which has led to tighter credit conditions and increased difficulties for buyers the housing market has also slumped, and estate agents are reporting the slowest sales in many decades. For those that were hoping to get onto the property ladder things are not looking too good, as the benefit of lower house prices has been counteracted by higher borrowing costs and increased difficulties.
However, some industry officials have suggested that there is one way in which some consumers could get their hands on a property without paying a fortune, and some could potentially pick up a real bargain by purchasing a property in this way. It has been suggested that one way to get a real bargain on a property these days is to go to auction, as many of the properties that are going under the hammer are being sold at bargain prices, and in many cases the price on homes that are left unsold can be negotiated with the vendor.
Industry officials have said that the number of homes that are now actually getting sold at auction has dropped over recent months, and because of this auctioneers are demanding that sellers ask a realistic reserve price on the property otherwise they may refuse to take on the property.
This means that the property may sell for far less than it might have, say, one year ago. On top of this, the greater number of homes that remain unsold after going under the hammer means that a greater number of vendors are more likely to accept a lower price or at least negotiate with interested parties.
One industry official said: ‘Auctioneers are getting harder and harder on vendors and saying prices just have to come down. If you have a house at an estate agent that’s been trying to be sold at £300,000 and isn’t going, then the reserve needs to be £220,000 or £230,000 maximum, not £280,000, otherwise it just isn’t going to appeal.’
He added: ‘Portfolio sellers are more realistic as they realise that if you want to sell something and what the market says, then you either have to keep it or accept it and sell at the lower price.’
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