Buying a property at auction

[ZolaBuddleia]

Do they normally go for less than the market price? Obviously I understand that it will go for whatever someone will pay for it, but I wondered if there's a general rule of thumb. The house I'm looking at is a repossession which has been on the market for about 2 months.

The ones that I have followed in London go for significantly more. Generally, the guide prices are the absolute minimum that a vendor will accept but quite often they are a means of getting people interested and the actual reserve is much higher than the guide states.

Surely less than the market price else why would anyone buy that way?

one house in our terrace sold for 25% more than we paid for ours half a year earlier.
identical footprint/layout/garden but the house in auction was not inhabitanle/in very bad need of repair.

If you get 2 or 3 really interested buyers then it can go a bit crazy in the sales room - turns into a competition not an auction.

But in my experience (midlands) the house normally goes for a reasonable price - we got a bargain!

I suppose the property programmes have changed the nature of them. Lots of people competing to get a bargain and actually driving it up. Like ebay where people sometimes pay more for 2nd hand than new.

It has been on the market for 79K and the asking price for auction is 60K.

What are other properties in the area selling for? Does it need serious work? Have you read the vendors pack to see if anything is outstanding?

Someone who works for one of the auctioneers was telling me that he knows of people buying properties (in London) on the open market and putting them straight into auction to make a profit. One near us sold recently for 35% above guide - not that unusual - but the vendor, the local authority, was also asking for a 2.75% premium which, with stamp duty at that price, meant the buyer was paying almost another 8% in fees for a pretty shabby Victorian subdivided Victorian house.

Haven't seen a vendors pack, there is an open viewing in a couple of weeks.

Hard to compare to other houses in the area, as there are very few of this type of house there. I do know one in the same terrace went for 125K 4 years ago, but the market in this area has only just stopped falling.

No, it doesn't need serious work, and had a tenant until the repossession.

That's so odd that people pay over the odds for a house that they could get on the open market!

We are currently buying an auction property and looked at several others before this one. The ones we were interested in all went for less than the market rate - that is the only reason we were interested. Could have done without the stress of auction terms to be honest, but we would never normally have afforded this house.

There are added complications with repossessions though, as you probably know. If you pay 10 percent deposit at auction does it still stay on the market until completion?

No, because you exchange on the fall of the hammer so the contract is binding and the house can only be remarketed if the buyer is unable to complete (and loses his 10%).

Ah, so auction is possibly the best way to buy a repossession then?

You have to know what you're doing, and you need more cash, because as la-la says, you exchange as the hammer falls - so you have to pay for and complete any surveys or searches you want before auction, with no guarantee you'll actually get the house.