Daily Archives: May 19, 2011

House auction

Went to a house auction today.  Only a very small local affair held at the Bedford Hotel, but nevertheless an interesting experience.  One of the lots has been on my radar for a while, and I’d’ve been interested in bidding if I had a regular income stream to support a 50%-or-so mortgage on it.

Since I’m not in a position to bid on the interesting house, I was definitely not bidding.  I took a seat in the back row, leaving most people where I could observe them, but standing behind were not just event staff, but also some punters.  The room was stuffy but otherwise pleasant.  The auctioneer was not using a sound system, and I had to listen up to hear him, but his patter was amusing, engaging and reassuring.  As indeed it jolly well should be from someone in his line of work!

Lot 1: a tiny one-bedroom cottage in a lovely (but impractical for someone needing connectivity[1]) –  location, in need of extensive renovation.  Guide price £65-75k, went for £83k in a fairly lively contest.

Lot 2: a much bigger but ugly house in a nondescript location.  Guide price reduced from £175k in my catalogue to range £150-175k.  Bidding again competitive but looked reluctant: the buyer, an elderly gentleman, looked as if he was letting the auctioneer bully him into his £165k winning bid.  I couldn’t even be sure the previous £164k wasn’t “off the wall” – a thought that crossed my mind again at Lot 6.

Lot 3: a nice but not economically useful plot of land.  Two thirds of an acre, so one would’ve thought very little value without planning permission – which it didn’t have.  And within the National Park.  Plus a clawback if buyer sells at a profit within five years.  Guide price £40-50k seemed horrendous, but it fetched £45k.  Evidently someone has high expectations of getting planning permission!

Lot 4: a pretty decent-looking investment property: a big sea-front house divided into three decent-sized flats.  Guide price £160-180k, reduced from 180-190 in the brochure.  Not much interest, and it went at £160k to someone bidding by ‘phone.  Looked like a bargain to me!

Lot 5: the one I was interested in.  A three-bedroom riverside house, formerly a forge building.  Been a long time on the market but overpriced: in the autumn of 2009 I was thinking “if it comes down within offering distance of £175k before the end of the year (and £175k stamp-duty holiday), I’ll definitely take a look“.  Guide price £180-200k, so finally in the ballpark of my target and looking like a bargain if I’d still been on a mortgageable income.  The auctioneer clearly also considered it the star attraction, and said so.  But he and I were both wrong: there were few bidders, and the £175k best bid failed to secure the house.  Evidently a would-be vendor still deluded after over two years failing to sell.  Land registry shows it last sold at £238k in November 2003 so the owner is taking a hit, but given that they don’t actually live there it’s hard to have any sympathy for a speculator losing out.

Finally Lot 6: a former chapel converted to a home.  Looked interesting, and at a £80-100k guide price I might have contemplated bidding if I’d been happy with the location (Okehampton).  Bidding went up to £104k, and the auctioneer tried very hard to cajole the £103k-bidder at the front into raising to £105k.  But unlike Lot 2, this one wasn’t budging, and it ended without selling.  Could the £104k have been “off the wall” on the assumption of £105k, or was this a less-than-honest would-be vendor so blatantly mismatched guide and reserve prices?

All in all, an interesting experience, and I think I could feel more confident now to bid at a future auction.  Though of course that’s subject to caveats about whether I’d hold my calm under the stress of competitive bidding.

[1] there’s no ‘phone signal, no clarity over ADSL, and in a steep valley where even satellite might fall short.