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Auction Property

Outbid For An Auction Property And I Wasn’t Even There!

Today I went to see a lovely little property which is just a few miles from my home. While the property is in a small market town it does have a main line fast train to London which gets you to Kings Cross in 40 mins. Also, it has good road links to Cambridge so it’s popular with commuters.

The property was a repossession which had in fact been empty for over 2 years before it had even been entered to auction! The agent was telling me this was usual and most properties which came to auction did so having been left empty usually for around 18months beforehand.  He then proceeded to tell me of another 8 properties in the town which he knew of which had been repossessed and which had been empty for over a year which had just been left by the lenders.

I have been in the game a while but even I was shocked to hear how long it took the various lenders, banks and organisations to get themselves organised enough to sell a property. What smacks of injustice is that all the while the borrower is having interest and charges added to the amount they owe.  It is awful – especially in cases where the property could be rented out in the meantime.   Not only that, empty properties are security risks and attract all sorts of vandals and criminal activity which can both impact upon the value of the property and bring the neighbourhood down.

Anyway – back to the property.  It was a 2 bed mid terraced house built about 18 years ago and had a guide of 95k. Now I know the area and I knew instantly that in good condition it would sell on for c.150k and rent for 600-650pcm. Given the proximity of the property to me and the fact it was a more modern build, on this property, I would therefore have accepted a much lower profit margin than usual.

So here are some external shots of the property and surrounding area. It’s a lovely friendly area:

So here is the lounge and kitchen:

Conservatory and garden (not a great picture as no back door keys so taken through the glass!)

Bedrooms and bathroom:

While the property doesn’t have any features or character – and there’s not much you can do to improve on what is there – this is still a solid little investment. It is a modern-ish mid terrace house which is ideally suited to first time buyers, can be sold in their price bracket and will have appeal due to it’s town centre location and great transport links.

I got the legal pack and was over joyed to see all was in order. I called my friend at the auction house and expressed an interest in this and another lot (more about that next time).  I was over the moon and I looked forward to doing an easy project just down the road from me.  I had worked out my sums and knew I was in for a really good chance on buying this.

So there I was cheque book in hand excitedly about to leave for the auction – and the phone rings.  It’s the auctioneer.

“Sam, he says, “I’m just calling about lot 20”

“Yes” I reply

“Well I know you’re coming to London today to bid on this”

“Yes”

“Well, I have just been informed that the bank have done a deal with a vendor who the estate agent introduced and they exchanged this morning for £105k”

“What” I retort “but I was going to pay more than that!”

“I’m sorry” he says “They’ve exchanged and there’s nothing we can do, it’s been withdrawn from auction. I just wanted to save you a trip as I knew you would be disappointed” and hangs up

And there I have to hang up my dream of doing an easy project close to home… 🙁

4 comments
  1. Johnny Debt

    I think waiting for a property to go to auction, means that you have missed the best possible price for the property.

    One of the best ways of finding repossession properties, would be to go to your local court and find out on which day repossession hearings are.

    If I remember correctly the repossession cases are posted on the court notice board, with the relevant information.

    1. Sam

      Yes Johnny I agree.

      I have also been speaking with some debt companies who represent people when they are about to go bankrupt as I’m sure there has got to be a better way than involving all these organisations and this time lag – it ends up much more expensive for the borrower.

      However, what they have come back to me and said is that the bank must prove that they got the best price for the property. (This is after a person has gone bankrupt) A case in point was last week, a local landlady had 32 properties and was about to go bust. (went to court last week). I said to the debt company (who had represented her). Well can’t we do a deal and we will bulk buy the portfolio from the bank?

      The issue he had was a. all properties were in negative equity b. banks need to show they got the best price for the property c. How would we make an offer based upon these factors as the offer would be for less that what the loans were for (as the borrower had overextended).

      I am more than happy to look at how we could work with people to either a. save them from going bust b. buy the portfolio asap rather than it sitting empty for years. However, it would appear as the debts are all far in excess of the property values we seem to get stuck

      Any thoughts/ opinions greatly appreciated?

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