Traditional advice or commentary on property auctions generally advises inexperienced buyers to avoid them; however, home buyers in the current market cannot afford to step back from this challenge. On the 15th April 2011, Allsops /SPACE Estate Agents will host Ireland’s first bank/repossessed property auction at the Shelbourne Hotel in Dublin. We understand that this will be a regular event with further BMV distressed properties likely to go under the hammer in June and possibly September 2011. Real Estate Alliance (REA) are considering taking a second try at the “super auction” approach that yielded mediocre results at best last year, if this goes ahead, it appears that May 2011 will be the date. Watch this space…
So, with the likelihood of high-volume bank auctions and more motivated sellers in the marketplace together with difficulties in ascertaining market value, auctions are going to play a much greater role in the passing of property. The good news for inexperienced buyers is that very few bargains are achieved in the auction room, invariably they are achieved as a direct result of the preparation in advance.
There are a significant number of steps that must be undertaken and checks that should be carried out before the auction, most notably:
1. Buyers should attend the auction of any properties similar to what they are seeking. There is no point attending an auction for agricultural land if a three bed semi is required. This will educate the buyers on the practice of auctions in Ireland. It is worthwhile to watch skilled bidders in action when there is no pressure to get involved. Alternatively, buyers may attend auction training sessions with Buyers Broker Ltd – please contact firstname.lastname@example.org for further information.
2. Buyers should view the property thoroughly on at least one occasion to ensure that it is the right property for them and to carry out a cursory inspection. Buyers will need to ask questions of the auctioneer, listen carefully to the responses and build up a picture of the seller and /or their circumstances.
3. Research should be carried out on the immediate and surrounding areas to help buyers ascertain the true value of the property, having regard to the local demand and supply or over-supply as the case may be.
4. Buyers who intend to finance their purchase by way of a mortgage must consult with their lender in advance and let them know about the auction and the property being pursued. It is absolutely essential to receive written approval in principle in advance of attending the auction.
5. Buyers are advised to have the property surveyed by a qualified engineer or building surveyor.
6. The next step is for the buyer to take up a copy of the draft contract for sale together with the copy title deeds and supporting documentation from the seller’s solicitor and have their own solicitor inspect same.
7. The final task before the big day is for buyers to set their ideal price and maximum limit for acquiring the property in question. The ideal price is what the buyers would ideally offer to secure the property, if it was not subject to auction. The limit figure is not necessarily the maximum mortgage approval or maximum budget but rather the most the property is worth to the buyer.
In our next Irish property auctions post (part 3), I will set the scene of what actually happens when bidders step inside the auction room. If all the world is a stage, then bidders will need to embrace the drama of this property dance.
This is an exciting time for would-be buyers interested in securing one of the 84 BMV lots on the 15th April, talk to us on 01 4428 035 for auction particulars and advice.
MD Buyers Broker Ltd