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.

Posted on May 19, 2011, in houses. Bookmark the permalink. 1 Comment.

  1. When you’re actually interested in a house, trying to buy it at auction is a truly horrible experience. I wrote up my most traumatic such episode on a now-defunct blogging site – can e-mail it to you if you’d like.

    If you find yourself doing it, I recommend:
    1. Position yourself where you can see the rest of the bidders
    2. Don’t be the first to bid, but once you start, don’t hesitate.
    3. When you decide your limit, decide your *real* limit. Don’t put yourself in the position of having to wing it on the day. When you’re under that kind of pressure, it’s no time to be doing mental arithmetic.
    4. Whatever happens, don’t think about the agent. They’re pure evil, nothing you can think about them will profit you.

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