Relief for Home Buyers at Property Auctions
As homes become harder to shift auctioneers are demanding that vendors reduce their reserve price before they agree to take them on as clients.
New hope for homebuyers has been found in the form of properties up for auction, as it may now be possible to pick up a bargain as vendors are forced to lower their prices as a result of the current downturn.
Figures show that, in the 3 months to August this year, just 54% of homes up for auction were actually sold. This is compared to 71% across the same period in 2007. As a result, auctioneers are coming down hard on vendors in a bid to save their own business.
For example, a property that fails to sell for £300,000 via an estate agent needs to have a reserve price at auction of approx £230,000 in order to attract any real interest. In the past, when the market was much more buoyant, reserve prices would have been more in the region of £280,000.
There has been a significant switch towards a buyers market this year, with Halifax claiming that August 2008 figures have shown a year on year fall of 11%. This is in comparison to August 2007, when figures showed an annual growth of 11%.
As many sellers resolutely refuse to reduce their market price there has been a significant rise in the interest for property auctions. But once you have agreed to buy an auctioned property you are legally bound to pay the full amount within just 28 days. It is therefore vital that finances are in place before committing to any contracts.
You are still not guaranteed to find a bargain at auction, but your chances are much higher. Look out for houses being sold by housing associations and local governments, as these are most likely to be reasonably priced.
