I LOVE property auction bargains.
Some would say I am *addicted*
And I cannot deny I love the thrill of feeling I am getting bargain. But, I know I am not alone – I know you all feel the same. It’s that inner pleasure of “smugness” when you buy something for less than what it’s worth. It’s such a tantalising buzz…
So when I wrote the other day about a 1 bed flat in Liverpool going to auction with a ridiculously low guide price of £6k I just couldn’t help myself. I just had to know more.
To remind you here is the property in question:
It’s a one bed flat of 40 square metres on a long leasehold.
Now, I am not familiar with Liverpool, but I have to say, even for my lack of local knowledge £6k for this flat sounded cheap.
And so I called my Liverpool Expert to find out more.
This is how the conversation went:
Me: “I have seen this property in an area of Liverpool which I am not familiar with, but I wondered if you could shed some light on the area, and what your thoughts are for future rental and resale, I’ll just send you the details now”
(Email pings over)
Liverpool expert: “Oh, right….” Uncomfortable silence. “Are you really serious about this area?”
Me: “Listen, I know it’s going to be rough, it’s just the property is cheap – and I mean cheap“
Liverpool expert: “OK, the area is well known for being a really rough area – and I mean rough. Most people there have got ASBOs, there’s massive crime, it’s filled with hoodies, youth crime and knives. While you would probably get a rent of around £300 per month it would only be DSS or more likely a drug dealer. The F.T.M graffiti – that means F**k The Matrix – which is the police. It kind of typifies the area and the sort of people you’re dealing with”
Me: “Well, I guess that would explain the low price”
Liverpool expert: “How low?”
Me: “6 grand”
Liverpool expert: “WHAT? What did you say – 6 grand? Are you for real? Are you kidding? 6 grand for a 1 bed flat? Are you sure?”
Me: “Well, that is the guide – obviously it’s a property auction so will go for whatever price someone is willing to pay, but what do you think of that?”
Liverpool expert: “6 grand!!!!!!!!!!!! That is CRAZY – that is so LOW!”
Me: “So would you buy it?”
Liverpool expert: “I don’t know, I don’t know if it’s *worth* it”
Me: “But, you just said it was SOOO cheap and agreed with the £300 rental – even if it is DSS or a drug dealer”
Liverpool expert: “Yes, but it’s the sort of area and the sort of people you would have to deal with. PAUSE AND DEEP SIGH. I don’t know if it’s worth the hassle…I just don’t know who you would ever sell it to – who would willingly buy a property in that area. Are you thinking of viewing it?”
Me: “After what you’ve just told me about the area – not a chance – I value my life too much!
But still my curiosity was piqued – what sort of person willingly buys a property in an area as bad as this?
So I got the auction legal pack.
And I discover that the flats were built just 6 years ago and in 2006 somebody paid £70k for the flat. Yes, the same flat which now has a guide price of £6k was bought for £70k just 6 years ago – which is a pretty catastrophic market price correction!
But what sort of person would willingly buy a property in an area like this?
I can tell you.
It’s all there in black and white on the title deeds: the property has a restraint order made under the Proceeds of Crime Act 2002. The purpose of a Restraint Order is to preserve assets which have been acquired with the proceeds of crime so that they are available to satisfy any Confiscation Order which may be made at the end of criminal proceedings. Which means this has been proven to be a “Criminal Property” – and it’s even registered at Land Registry.
So despite the incredible yield, I won’t be buying this flat at auction – but I am interested to see who does buy it. Maybe I should go to the auction just to see…