WHEN IT COMES TO BUYING AT AUCTION YOU’VE GOT TO BE IN IT TO WIN IT!
I received a phone call recently from a lady called Sally. Sally is a first time buyer living in London. She is looking to buy a property, but can’t afford anything in London – and doesn’t foresee being able to anytime soon. But with money in her bank she is keen to get on the property market somewhere – even if it doesn’t mean actually living in the house herself. Hence the telephone call to me here up North.
So in brief, Sally is a first time buyer, looking for a buy-to-let investment in the North West. We spent some time together discussing various BTL models and different areas that would suit her budget and circumstances. And then she asked me an interesting question…
There has been plenty of talk about property prices increasing in light of the proposed stamp duty increase on 1st April. There is a lot of hype around the market at the moment with news that eager landlords are swamping the market desperate to buy property pre-April, and complete in time to save an extra 3% on Stamp Duty.
Given that Sally is a first time buyer, this new ruling won’t affect her and, therefore, she wanted to know if now was a good time for her to buy a property, or whether it would be more prudent to wait until after April? She’s in no rush after all.
So I’m going to address Sally’s question here:
First of all – don’t get too carried away with all the Stamp Duty talk. Yes, there has been an increase in the number of buyers coming to the market, but there has also been an increase in the number of sellers coming to auction to capitalise on this increase in demand. We have a client who recently put sixteen of his properties in our auction hoping to achieve higher sales prices before April. So whilst demand has increased, so too has supply and, therefore, prices aren’t “rocketing overnight” as reported elsewhere. As is often the case, the reality is not as dramatic as it may seem in the media.
So should Sally look at this auction to buy her first ever property?
Of course she should.
Her finances, whilst quite tight, are in place, and she has plenty of time to research my suggested areas and carry out all the relevant due diligence for the properties that meet her criteria. So why shouldn’t she?
Yes the auction room on 16th March might be hungrier than usual, and Sally will be bidding against more experienced buyers, but it wouldn’t be an auction without competition. And there is always going to be something in the news that could put you off buying. If it’s not Stamp Duty, it’ll be interest rates. Before that we had Home Information Packs – who remembers those? There will always be obstacles and there will always reasons why now isn’t the ideal time to buy. But if you see something that you’re looking for, if it fits your criteria and your budget and you do all your homework before the auction, then why wouldn’t you go for it?
Are you guaranteed to be successful on the auction day? No. But nor is the seasoned investor on the other side of the room who you’re bidding against. One thing’s for sure though…
You’ve got to be in it, to win it!
If, like Sally, you have lots of questions about buying a property at auction, get in touch.